If you have ever been in a situation where you have bills piling up and credit running low, you would know how important it is to have access to an easier source of instant cash that will keep you afloat for a while till your payday finally arrives.
Payday loans are not novel anymore. There was a time when people would think that payday loans are just like same old personal loans and one needn’t take on interest rates that seem to be over the top. But today, the payday loan industry in Australia is not only growing, it’s thriving. Payday loans market, on an average, has processed transactions in excess of $450 million for the last five financial years.
Of course, there are a few concerns that most people who want to apply for payday loans have. There are many stories floating in the media. There is word of mouth, even rumours.
It must be made clear at this point that the idea of payday loans is not at all different than any other type of loan. The best way to find out if a payday loan can save your day is to try to understand them better.
You can think of payday loans as emergency, 11th hour credits. At one point or another, all of us get to experience the pressures that our lifestyles bring with them. There are many ends to be met and not enough money to tie them all together. Payday loans can come to your rescue in such situations. Payday loans are small loans that can be approved instantly. Typically, payday loans need to be repaid within a month or so, depending upon the contract you have made with the payday lender. In the majority of cases, you can receive a decision about your payday loan application within minutes of you submitting it. Once approved, the money is directly transferred to your bank account electronically – it’s as easy as that.
You can either choose to align your payday with the repayment due date, or choose another day – as suits you – to complete the repayment.
Here’s your ultimate cheat-sheet to understanding what payday loans are:
It’s true. Payday loans are instant in almost every case. Once you submit an application, lenders can choose to approve it or reject it. Regardless of the outcome, you will be notified of the decision within a few minutes. Approved payday loans are processed within 24 hours. So, in short, you can expect to see the money in your bank account on or before the next banking day.
Let’s face it. We all have to deal with our shares of money problems every now and then. It matters the most when needs are urgent. There are times when you exhaust all the cash you have with weeks to go before your payday finally arrives and your credit isn’t in the best of health, either.
If you can relate to this situation, you can easily understand why people take payday loans. Here are some of the most common scenarios that prompt people to apply for payday loans:
Medical emergencies present you with the bleakest times of your life. Whether it’s you or your family members, trips to a doctor are rarely inexpensive. If you are in the middle of a cashless month and you need to tackle such emergencies, instant access to cash – even if it’s just $2,000 – can really make a difference.
Paying bills is something all of us dread. This monthly exercise becomes even more difficult when you have more important things like food to take care of. People take payday loans in such situations to get by till the next payday.
You come across an irresistible deal for the car of your dreams but you just can’t arrange for the down payment that the seller is demanding. You can turn to payday loans to make the down payments on such deals!
The cold and harsh reality is that there are bound to be slip ups in your money management. You will end up spending money on things that you don’t really need – the expenses that can only be put down as indiscretionary. These come to bite you in the following month as your monthly budgetquickly grows out of shape. That’s when a payday loan can help settle things.
Here are some of the most basic requirements for you to be eligible for a payday loan in Australia:
These are the necessary conditions for one to be eligible for a payday loan. In rare cases, further inquiries into credit score can be made by a payday lender if they think it’s necessary.
Payday loan interest rates are higher than the loans offered by banks or other credit sources. Since these rates are calculated on a monthly basis, they tend to appear even higher on the annual scale.
Here’s a breakdown of the charges applicable to all payday loans:
Establishment fees are charged only once: 20% of the loan amount
Interest is charged at 4% (maximum) on a monthly basis.
Following table will give readers an idea about the interest charged by payday lenders.
|I want to borrow||For||Establishment Fees (one-off)||Interest||Total to be repaid|
Payday loan interest rates are often a matter of debate among borrowers and in the media. A lot has been said and written about high interest rates that payday lenders charge. However, it must be taken into account that payday lenders regularly give loans to individuals instantly, without collaterals and that largely contributes to this high interest rate.
Before applying for a payday loan, you must seek clarifications from the lender regarding other charges like late fees, fines and default fees.
Applying and getting appro\ved for a payday loan is much easier than other loans. Here is a list of all the things you will be needing while applying for a payday loan:
Payday loans are convenient and easy. However, there are certain shortcomings associated with them. You will be much safer knowing these beforehand.
|Payday Loans||Credit cards||Bank Loans|
|Loan Amount||Small ($200 to $2,000)||No cap||No cap|
|Interest Rate||High (24%, variable)||High (20%, variable)||High (11%, variable)|
|Application Procedure||Short and Simple||Lengthy and Complicated||Lengthy and Complicated|
|Credit History||Not relevant (with exceptions)||Relevant||Relevant|
In most cases, payday lenders don’t check applicants’ credit scores. However, there are certain exceptions when a particular payday lender will decide to make a decision based on the credit score.
Here’s what you need to know regarding your credit file and payday loans:
Yes. The payday loan industry is thriving in Australia, as noted earlier. It is a well-established market and is fully regulated by the Australian Securities and Investment Commission (ASIC). So, taking a payday loan is safe, in that sense.
Regarding handling of your personal information and data, you should rest assured that your details are fully safe with Viva Payday Loans. We use state-of-the-art technologies to make sure that no unauthorized access to your information is granted. We will only share the information you provide us with suitable payday lenders – as you agree with, while submitting an application with us.
Pensioners can get payday loans as long as the lenders are convinced about their regular income – pension, in this case.
If you are a pensioner and you can produce a record of receiving regular pension for the past six months, most payday lenders will accept your payday loan application.
Single parents can get payday loans if they have a regular source of income. Depending upon the need for payday loans (medical, educational etc.), single parents can also be eligible for a rebate up to 20%. This is strictly left to the discretion of the lenders.
All Australian students (18 years of age or older) are eligible to get payday loans. They, however, need to be affiliated with a recognized Australian university/institution to make their case as a valid student. Students aren’t generally required to have a regular source of income. However, having a job (part/full time) or a student loan will boost the chances of getting the payday loan application accepted.
Policies regarding the approval of payday loans for Centrelink beneficiaries vary from one lender to another. Some lenders do approve payday loans to applicants who have listed Centrelink benefits as their only source of income. It’s always better to have another source of income to complement the benefits, in order to get your application accepted.
No. You can have only one ongoing payday loan and it cannot be renewed. If you already have taken a payday loan from one lender and you submit an application with another lender for a new payday loan, it will, in all certainty, be rejected.
This is strictly in keeping with the Australian Securities and Investments Commission policies and norms.
Before applying for a payday loan, you should understand that borrowing small loans for short terms is expensive. If you think you need to know more about other available options, you can approach a qualified financial adviser. Financial Counselling Australia offers many free services in this regard. You can simply call their hotline at 1800 007 007 to know more.