A guide to payday loans in Australia

Payday loans are still one of the most searched-for and in-demand financial products in Australia worth billions of dollars each year.

Payday loans are simply small, high-interest, short-term loans which offer quick cash for emergencies that needs to be repaid by your next payday.

They can assist you in dealing with cash shortages and financial emergencies. This can be anything from getting urgent car repairs done to something less serious such as purchasing a new item or going out.

The effect of online payday lending

With the advent of online lending, payday lending has exploded, with hundreds of thousands of people taking advantage of this quick and easy way to borrow a small sum of cash.

More specifically, about 85% of all payday loans are now taken out completely online. Whether it’s via an online lender or a mobile app, it takes just a few minutes to complete a payday loan application.

Why do Australians take out a payday loan?

Payday loans offer small sums of money which leads us to the obvious conclusion that anyone taking one out is in need of a cash boost and has probably run out of money. There are many people who take out payday loans because they are experiencing financial distress.

Taking out a loan to pay for existing loans is not a good idea and you should always consider alternative options to help get your finances under control. The sad reality is that many Australians who take out payday loans on a regular basis are struggling financially.

Tips for getting your finances under control:

• Avoid taking out payday loans or any credit to stay afloat
• Never borrow money to make repayments on existing loans
• Always create a debt repayment plan if you want to get a handle on your debt
• Use a budget to properly manage your money and ensure you have enough to last your until your next payday
• Make savings a priority and automate savings
• Avoid “rolling over” loans

When you shouldn’t apply for a payday loan

• If you intend on using the loan to repay other debt
• If you’re experiencing financial hardship
• When you have lost some or all of your income
• When you are unsure whether or not you’ll be able to repay the loan
• When you have an existing payday loan or too much debt
• When you do not really need the loan or have a better lending option
• When you can wait until your next payday to make the purchase

Tips to securing the ideal payday loan

When looking for a payday loan it is important to select a lender that is trustworthy and will not only offer you the ideal loan but also follow up with great service and support afterwards.

You may also want to select a lender that offers flexible terms and will offer you an instant loan application and approval should you opt to take out another loan at a later stage.

Comparing payday loans

Payday loans come with high-interest rates, and short loan terms and can be very restrictive since they must typically be repaid by the borrower's next payday or within a month. Loan comparison sites allow you to compare personal loans but rarely have a payday loan comparison tool.

As a general rule, if you select a leading lender that is well-positioned in the market and is known for being fair and offering a competitive and reliable service, you do not need to worry about comparing loans.

For those that have poor credit, you may want to check that the payday lender you’re looking at offers bad credit loans. If you’re unsure or simply don’t know where to look you can always opt for the services of a broker. Using a broker offers you a range of benefits and there are many Australian brokers who specialise in payday loan brokering.

Comparing payday loans on Finder.com.au

Finder has a range of payday loans available on their site that you can quickly and easily compare to select the best offer and product for your needs. They list the name of the lender, the maximum and minimum loan amounts, the typical turnaround time, late payment fees as well as loan costs and repayments.

You can select a few loans that meet your needs and then go on to compare them closely. It is important to note that the lenders listed on this, and any other, loan comparison website is not completely exhaustive of all loans and lenders available on the market.

This means that while this may be a useful tool to help you find and compare payday loans, you are usually only being shown a selection of lenders. This selection may not be the best nor the cheapest and it is important to take note of this.

Benefits of using a broker to find a payday loan

• Ensure loan approval despite having a bad credit record
• Ensure you access registered lenders that ate reliable
• Access a pool of lenders with a wider range of options to choose from
• Make a single application and prevent further damage to your credit score
• Allow a professional to access and negotiate the best deals on your behalf

Ensuring your payday lender is registered is important particularly when using a lesser-known lender. When a lender is registered it simply tells you that they are recognised by the relevant authorities and that they are aware and required to abide by the industry’s code of conduct.

Australia’s leading payday lenders

There is a large selection of reliable lenders from which you can apply for a loan within Australia. These lenders are typically more or less the same but may offer slight variations such as larger loan amounts, longer repayment terms or simply just stand out because of the personal service they offer.

Whether you choose to go with a lender that’s popular and you’ve heard of before or a lender that you find online that offers great deals, always ensure that the lender is registered and follows strict lending guidelines.

Payday loan repayments & non-payment

If you miss your payday loan repayment, as with any other loan, your credit will be affected negatively and you may be forced to pay late or non-repayment fees.

It is important to check your budget prior to applying for a loan and ensure that you will be able to make your repayments on time whether or not you meet the affordability assessments.

If you cannot afford the repayment it is best to contact the lender and inform them of your situation prior to the repayment due date.

Lenders will more than likely be willing to assist you by extending your loan term, accepting a smaller repayment or deferring your repayment until the next month.

Do not make “rolling over” your payday loans a habit as this is not only expensive but is a very difficult situation to recover from.