Unsecured Payday Loans in Australia: All You Need to Know

Getting quick loans in Australia can be a great way to get money when you’re running low on cash. However, it’s important to know what you’re getting into before applying for one, especially if you don’t have much experience with this type of loan.

If you’re looking for a quick way to get the money you need, consider getting unsecured payday loans. These loans are designed for those who need quick cash and don’t have something to put down as collateral. 

In this article, we’ll discuss what these loans are, who’s eligible for them, and their pros and cons.

What this article covers:

What Is an Unsecured Payday Loan?

Short-term payday loans are small-dollar loans that can be used to pay bills or cover expenses until the borrower gets paid again. The borrower typically writes a post-dated check to the lender for the amount borrowed plus interest and fees. Payday loans are usually unsecured; you don’t need collateral to borrow them.

You can get $500 payday loans, and up to $2,000. The interest on the loan is often exorbitant, which can be difficult for borrowers to pay their debt.

unsecured payday loans

Eligibility Criteria

It’s important that you know every payday loan lender will have their own set of eligibility criteria, but many of them almost always include the following:

  • You must be at least 18 years old on the day that you’ll apply for the loan.
  • You must be an Australian citizen with a permanent address.
  • You must have had a steady flow of income for at least the last 6 months. 
  • You must have good credit standing. 

But why do most lenders require that you have a good credit standing to get such loans? It’s because they want to know your capability of repaying your loan since you’ll not be attaching any collateral. They don’t have any kind of assurance that they’ll get something in return if you default on your loan, so they’ll instead look at your credit history. 

Pros

Let’s look at the advantages of this loan.

  • Fast Application: Most lenders will just need you to fill out their online application form and send the requirements. After that, you’ll just have to wait to get approved. Always look for a 24hr payday loan lender to get a fast approval timeframe. 
  • Quick Disbursement: Most payday loan lenders disburse money as soon as they approve your loan. You’ll usually get the money in 10 minutes. However, this might take longer, depending on the lender.
  • Less Hassle: Unlike personal loans, payday loans usually require fewer documents. Also, since you’re applying for an unsecured one, you don’t have to worry about any collateral to attach. 

unsecured payday loan

Cons

Now, it’s time to discuss the downsides of getting this loan.

  • Needs Good Credit: Since you’re applying for an unsecured loan, you need to have good credit standing to guarantee approval. It’s rare for lenders to approve borrowers with bad credit without collateral. 
  • Hefty Fees: According to ASIC, payday loans under $2,000 will have a one-time deduction of 20% of the total borrowed amount, additional government fees, and default penalties for up to 200% of the loaned amount. 
  • Small Amount: If you have a credit score of 700+, which is considered “good”, lenders might only let you borrow a small amount. The amount is usually under $2,000. 

How to Get a Larger Payday Loan Amount

Go for a secured loan to get a larger amount. You must have collateral, which is usually your car, to get an amount higher than $2,000. There are even 1hr payday loans for this.

The best part of this is that you don’t have to have a good credit standing! Even if you have bad credit, your loan’s approval won’t be put in jeopardy. Most lenders will focus on the collateral you’ll attach to your application. 

However, you must have a “good” car (or any accepted form of collateral) to get a decent loan amount. While you can set the loan amount you’d like to borrow, it’s up to the lenders how much they’ll loan you according to your collateral. 

The downside of secured loans is that you’ll risk losing your car. So, always make sure that you’re capable of repaying if you don’t want this to happen. 

best unsecured payday loan

Conclusion

Getting unsecured payday loans can be a great way to help you get through a financial crisis. However, it’s a gamble to rely on them, especially if you’re not fully capable of paying them. The penalty and other fees can bury you in more debt. Also, your approval isn’t guaranteed since it’ll depend on your credit score.

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