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How Are Banks Associated With Payday Lenders?

Learn how banks take part in the payday loan industry.

Get a quick estimate for loan
How much cash?
How long for?
Loan length:
APR:
Interest:
Pay by:
16 Days
728.9%
$7.72
23.1.2014
Total repayment:
$107.72

Some payday lenders are fully backed by banks while others only partially. There are also some payday lenders who operate without any funding from banks.

Do banks offer payday loans?

No. Banks in Australia do not offer payday loans. Some banks back payday lenders with extra credits that they can extend to public as payday loans.

Why do banks back payday lenders instead of offering payday loans on their own?

In terms of loan recovery, payday lending is considered to be a high-risk affair. Payday loans are typically small and banks cannot afford to engage their resources at such small levels.

That’s why, banks choose to fund lenders instead of offering payday loans on their own.

Is it safe to take a payday loan from a lender who is not backed by a bank?

It’s rather difficult to know whether a certain payday lender is backed by a bank or not. Banks typically refrain from making their associations with payday lenders public.

That said, it’s always the best idea to take a payday loan from a lender who has a solid industry reputation.

Is it true that payday lenders backed by banks offered lower interest rates?

As mentioned earlier, banks do not make their associations with payday lenders public. So, it’s difficult to say whether payday lenders backed by banks offer lower interest rates or not.

A quick survey of interest rates offered by payday lenders can help you choose the most suitable option.

Witha payday loan, am I dealing with a lender or a bank?

With a payday loan, you are dealing with a lender. As made clear earlier, banks do not offer or approve payday loans.

Payday loans

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