Pay Day Lending Explained

A short term loan is a form of credit that is advanced to you when you fall short of funds. It is generally paid back in line with when you are paid, hence the term "payday loan". They also can go by the terms cash advance loans and bad credit loans. Loans up to $2,000 come with fixed fees, regulated by the government at 24%. This is comprised of a 20% loan establishment fee and a monthly loan fee of 4%, which are calculated based on your principal.

What is my loan principal? How much you borrow from the lender will always be referred to as the "principal amount". It is your duty to ensure that you have the available funds to pay back your loan on the due date including any fees and charges applicable. Use the calculator above to get an idea of your repayments (principal + fees). A short term loan is unsecured so if you can't pay it back, the lender can report the debt to a credit reporting body and use the services of a debt collector.

What features are you looking for?

These loans go by a range of names in Australia including cash advances, payday loans and short term loans. Before you apply, compare a range of loans that might fit your needs.

  • A short repayment period
  • Lenders that consider bad credit applicants
  • Loan available on the weekend
  • Lenders available online
  • Loans with easy approval
  • Emergency cash you can apply for quickly
  • Loans that don't require collateral
  • Lenders that offer no credit checks

Are these types of loans a bad idea?

Short term cash advances can be a convenient way for you to access credit, but you can also be penalised for not sticking to the repayment requirements. If you default on the cash loan or the loan goes into collections you will receive a negative mark on your credit file that can stay there for as long as seven years. It’s important to only borrow as much as you will be able to repay and to budget your repayments accordingly. If you have any doubts about your ability to meet your repayments then you may want to consider other credit options.

You can calculate the amount you will pay with the Government Calculator:

https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/payday-loan-calculator