Payday Loan Organizations

If you’re in need of a fast, small-sized loan, payday loan organizations are the way to go. 

But how exactly do these organisations operate? How much will they charge? And more importantly, are they all the same or are some better than others? 

If you’re interested in finding out all these and more, take a look down below. 

What this article covers:

• Payday Loan Organizations in Australia
• How Much Do Loan Organizations Charge?
• How to Choose Among the Different Loan Organizations
• How to Apply for a Payday Loan
• Can a Lender Give You More Than One Loan At a Time?
• Do Payday Loans Work With Centrelink Recipients?
• Can You Get a Payday Loan If You Have Bad Credit?
• Pros and Cons of Payday Loans
• Can Payday Loans Help Improve Your Credit History?
• How Long Will It Take to Receive the Loan Money?
• Reasons a Lender May Reject Your Application
• Alternatives to Payday Loans

Payday Loan Organizations in Australia

In Australia, there are numerous loan providers and organisations that specialise in payday loans. 

As you know, payday loans are small-sized unsecured loans that range from $500 to $5000. Usually, they’re meant to be repaid by your next payday, hence the name. However, you can repay your loan in as short as 16 days or as long as a year. 

Now, the best thing about payday loans is that they’re usually easy to obtain. Since they’re only for small amounts, they aren’t quite as strict with their requirements. 

In fact, some loan providers occasionally skip running a credit check on their clients. As such, individuals with bad or insufficient credit are often accepted.

In exchange, the lenders may charge slightly higher interest rates on their loans. That way, they can minimise the risk they’re undertaking. 

So, unless you’re positive, you’ll be able to keep up with your loan payments. It’s better to look for a loan with more affordable rates. 

How Much Do Loan Organizations Charge?

Thankfully, all licensed payday organisations are regulated by the government. As such, their fees and interest rates have a fixed limit that can’t be crossed. 

According to the ASIC, all payday loans equal to $2000 or less can’t have more than a 20% establishment fee and a 4% monthly fee. 

Accordingly, if you borrow $1000 to be repaid in 3 months, the most you’ll be expected to pay are the following:

• Establishment fee: $200
• Monthly maintenance fee: $120 ($40 x 3)
• Total: $1320
• Payment on a fortnightly basis: $188.57 (7 payments)

Any establishment that tries to charge you more than these fees are breaking the law. So, make sure to double-check your loan fees before signing any contract. 

As for payday loans larger than $2000 and smaller than $5000, loan providers will replace the monthly maintenance fee with an interest rate. 

The establishment fee is still there, but it goes up to $400. As for the interest rate on payday loans, it’s capped at 48% p.a. of the principal. 

Be wary that lenders may charge you late or default fees if you fail to make your payments on time. A single late payment fee can go up to $7 per day, which isn’t cheap. So, make sure you never delay or miss any payment, or else you’ll only be making your debt larger.

How to Choose Among the Different Loan Organizations 

If you’re unsure which payday loan provider to choose, here are a few things that’ll help you make a decision. 

Lender’s Reputation

When choosing a loan provider, it’s imperative that you sign up with a reputable and transparent lender. If you don’t, you’ll probably be duped in some way or another. For example, the lender may attach hidden fees to your loan. He may also offer you unreasonable repayment terms. 

So, even if you have extremely bad credit, never ever go to a disreputable or off-the-wall loan organisation. Stick to well-known, trustworthy lenders, and you’ll be okay. 

Loan Term

As previously mentioned, the loan term for payday loans is fixed, ranging from 16 days to a year.  

But what happens if you repay the entirety of your loan before the specified loan term is up?

This will differ from one organisation to another. Some will charge you an early repayment fee because you didn’t adhere to the loan terms. Some won’t bat an eyelash and simply be happy you managed to repay the loan. 

So, make sure to ask about the policies of the organization before signing your contract. 

Note: Ask as well how much your lender charges for a late payment fee. If it’s too steep, it’s best you look for another loan provider.

Turnaround Time 

Turnaround time refers to how long it’ll take before you get your hands on the money. Some companies have a very fast turnaround time, usually approving your loan in less than an hour. Some organisations take a few days to review your application and send you the money. 

So, depending on how long you can wait, you may need to switch from one lender to another.

How to Apply for a Payday Loan

The first thing you should do before applying is to compare payday loans available and find the best deal. 

Once you have, you can simply fill out an online application. Here, you’ll need to state your personal information as well as how much money you’d like to borrow. 

The lender will then review your application, call you to confirm the details you sent, and get more information if needed. If all is to their liking, they’ll send you the loan contract to sign. Once that’s done, they’ll send the money to your bank account. 

Information and Documents Needed for a Payday Loan Application

Most loan applications require that you share the following:

• A copy of your ID
• Contact details, such as your email address, home address, and phone number
• Employment information 
• Proof of income (payslip or income statement)
• 90-day history of your bank transactions

Can a Lender Give You More Than One Loan At a Time?

In theory, you can take out multiple payday loans at once. There are no laws stopping you from doing this. 

In reality, though, it’ll be quite difficult to find a lender willing to give you more than one payday loan, even more so if you’re a first-time client. 

So, unless you have an impeccable credit score and your lender really trusts you, you won’t be able to take out a second loan until you finish repaying the first. 

Do Payday Loans Work With Centrelink Recipients?

Yes, though not every lender will be inclined to loan you the money. 

Generally, payday lenders don’t consider Centrelink payments as a sufficient source of income.

But that’s not always the case. Occasionally, some organizations will allow Centrelink recipients to take out a loan if it’s under the $2000 mark.

So, don’t be discouraged if your application gets rejected a few times. Eventually, you’ll be able to find a lender that has no issues with Centrelink income. 

Can You Get a Payday Loan If You Have Bad Credit?

Again, yes, but it’s not guaranteed.

Most lenders run a credit check on their clients. Based on your credit history, they then decide whether it’s okay to lend you money.

However, payday loans are sometimes a bit of an exception. 

Since the loans are relatively small, some lenders will look past your poor credit history and instead focus on your current financial situation. That means they’ll look at your income as well as your recent expenses and then evaluate whether you have what it takes to repay a loan. If you do, then they’ll give you the money, no strings attached. 

Pros and Cons of Payday Loans

As with everything, there are advantages of payday loans as well as disadvantages.

Pros 

• Payday loans are easy to get, only having minimal requirements
• Almost everyone can get approved for payday loans, even people with bad credit
• They usually have no interest rates
• Loan terms are relatively flexible
• You can narrow down more than one payday loan at a time

Cons 

• Loan amounts are limited
• Your credit score may be damaged if you don’t make the loan payments on time

Can Payday Loans Help Improve Your Credit History?

That’s a negative.

That’s because payday loans aren’t usually reported to credit bureaus. So, even if you manage to fully repay all your payday loans, this will all be under the radar. As such, your credit score won’t go up, no matter how many loans you repay. 

On the other hand, if you fail to repay the loan, the lender will make sure to report this default. In turn, it’ll go down in your credit history, causing your score to take a plunge.

How Long Will It Take to Receive the Loan Money?

The turnaround time will vary from lender to lender. However, most should be able to give you the money by the end of the day. That’s why payday loans are also known as same-day loans. 

Now, the earlier you apply, the better chance you have of getting approved on the same day. If you apply later in the day, say after 2 pm, you may need to wait for the next business day to get the approval. 

Note: If you use the same bank as your payday organisation, you may be able to get the money in just a few minutes after signing your contract. 

Reasons a Lender May Reject Your Application

If you’ve been unsuccessfully applying to a few lenders, here are some reasons you may be failing. 

Too Many Payday Loans

Having too many existing loans is a major red flag for lenders, even more so if you’re using one loan to pay for another. 

Once a lender finds out you’ve taken out multiple loans in a short period of time, he’ll immediately view you as high-risk and reject your application. 

Inadequate Income 

If you’re currently unemployed, most lenders will reject you without a second thought. However, some may consider your application if you have some source of income, such as Centrelink payments.

But keep in mind that you won’t be able to ask for too much money. 

According to the ASIC, if 50% or more of your income comes from Centrelink, you can’t ask for a loan whose repayment exceeds 20% of your income. 

Some may also reject your application if you’re self-employed. The same goes if your job pays you in cash. That’s because it’s hard to verify your income in either of those cases. 

Still, this isn’t always a deal breaker. If it is, your loan provider will state so from the get-go. 

Troubling Bank Activity

Any loan application needs to be submitted with a bank statement depicting your transactions in the last 90 days. 

If your loan provider detects any suspicious expenses, he may consider you a risky client and reject your application. Regular payments to gambling companies are considered a red flag. So are any large payments that don’t make sense.

A history of dishonoured payments is also suspicious. This is when you don’t have enough funds in your bank account to cover a loan payment.

If your bank account has any of the aforementioned problems, this is probably why your loan application keeps getting rejected. 

Alternatives to Payday Loans

If you’re currently unemployed and have a bad credit score, payday loans may not be an option. So, here are a few other things you can try.

No-Interest Loan Scheme 

The No-Interest Loan Scheme, or NILS for short, is a service offered for Australians who are having a hard time making ends meet. 

With the NILS, you can borrow up to $1500 without undergoing any credit check. Best of all, this loan doesn’t come with any fees or interest rates. You just pay back the amount you borrowed over 12-18 months, no more, no less. 

Unfortunately, a NILS loan isn’t available to everyone. To qualify, you need to either:

• Have a Health Care Card
• Have a Pensioner Concession Card
• Make less than $45,000 after tax deductions. 

Secondly, the loan money needs to be used for essential goods and services only. This includes things like medical or dental services, household and educational items, electrical goods, car repairs, and more. If you plan on using the money for something like a holiday or debt consolidation, you won’t qualify for the loan.

Centrelink Advance Payment

The Human Services Department in Australia allows Centrelink recipients to receive emergency cash loans known as advance payments. 

To be eligible, all you need is to prove that you’ve been receiving any Centrelink government assistance, like a disability support pension, care payment, or widow allowance, to name a few. 

Once you apply, you’ll be able to get a sum of money which will then be automatically deducted from your future Centrelink payments. 

Obviously, this type of loan doesn’t come with any fees, interest rates, or credit checks. However, its major flaw is that it cuts your income for the coming weeks or months. This may leave you in a hard spot, not being able to pay for your essentials, like groceries, rent, and utilities. 

FAQS

Why Don’t Payday Loans Under $2000 Have Interest Rates? 

In case you didn’t know, loan providers calculate their rates annually. Since payday loans are usually repaid in a year or less, such calculations can’t really apply to them.  As such, the governments set down strict regulations for payday lenders, only allowing them to charge set fees.  

How Do You Receive the Payday Loan Contract?

After you’re approved for the loan, your lender will send you a digital copy of your contract that you can sign online. Some lenders will simply send an SMS. 

Either way, make sure to review the contract terms very carefully before signing. If you don’t understand a certain clause or if something is unclear, make sure to go over it with your lender before jotting down your name. 

What Are the Eligibility Criteria of a Payday Loan?

 Most organizations in Australia will give you a loan provided that you:

• are a citizen or permanent resident of Australia
• are at least 18 years of age
• have had a steady job for the past 3 months
• have an active bank account, email, and phone number

Conclusion 

Australia has its fair share of payday loan organizations, and Orange Loans will get you in touch with the most trustworthy of them. On your part, you only need to compare same-day loans offered and choose the best one. 

Check the fees and loan terms and make sure they fall within the legal range. If everything is in order, don’t hesitate to sign that contract.