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Viva Payday Loans > Short Term Loans

Short Term Loans

Short term loans are being provided by many lenders in Australia due to their high demand. These loans carry a short loan term of usually under a year, and loan amounts not exceeding $10,000. Such loans also carry significantly higher charges compared to other loan options. 

Most Common Short Term Loan Features

There are many short term loan providers in Australia offering a variety of features. Some of the most common features are as follows:

  1. Loan terms ranging between 16 days to 1 year, although some lenders provide loan terms of up to 2 years.  
  2. A loan calculator, providing accurate estimates of the total cost a borrower would have to bear if they take out a loan with the lender, considering the required loan amount and the repayment period. 
  3. Some short term loan providers ask for collateral to be placed as security of a loan. This can be any asset of the borrower, provided it meets the criteria as set by the lender. 
  4. Almost all short term loan providers require borrowers to prove their affordability by sharing bank records and income statements. 
  5. Most lenders have short term loans of amounts under $2,000, while some are offering much bigger short term loans. 

Tip: A loan finding service like Viva Paydays can help you figure out the most suitable option for your needs by sifting through available loans and recommending the best one.

Eligibility Criteria

Most short term loan providers in Australia would require applicants to meet the following criteria. Applicants must:

  1. Be 18 years of age, or older
  2. Have a regular income that exceeds $350 on a weekly basis, with Centrelink funds accounting for less than half of this sum. 
  3. Provide evidence of stable financial circumstances (in case the applicant holds a bad credit rating). 
  4. Have a working mobile phone number and email address
  5. Be a national or PR holder of Australia

Pros and Cons of Short Term Loans

The following pros pertaining to short term loans that are available in Australia:

  1. Option to apply online

Since lenders of short term loans take on a very limited risk of default due to the small loan amount, all the information they require to approve a loan can be acquired over the internet. Hence, many short term loan providers now have fully-online application processes. 

  1. Sufficient loan amounts

Borrowers have the option to subscribe to loans of amounts between $100-$10,000, depending upon the lender. These amounts are sufficient to cover emergency expenses. 

  1. Charges are capped

Apart from the charges that are applied in case a borrower does not comply with all repayment terms, the origination and monthly charges have been capped by the government. Hence, regardless of the lender, a borrower cannot be charged more than a certain amount on a loan. However, some lenders have set charges below this upper limit as well.  

The following cons pertain to short term loans:

  1. They carry a high cost

Given the option, borrowers should prefer banks and similar financial institutions to opt for a loan, as such loans are cheaper and have a longer loan term, making it easier for borrowers to repay the loan on time. 

  1. Lenders are not always trustworthy

Before entering a loan agreement, it is expected that lenders would not approve a loan that a borrower cannot afford to repay, at least within the stipulated timeline. However, some lenders give out loans to vulnerable borrowers as well, leading many such borrowers into bankruptcy. 

Costs of Short Term Loans

Short term loans fall under the category of expensive loan options, and might not be suitable for those who are eligible for alternative options. Due to their high fees, Australian authorities have capped the charges that lenders can bill their customers on every short term loan. , 

Hence, lenders providing short term loans with an amount of $2,000 or below can charge a maximum of 20% in establishment fees and 4% in monthly charges. These fees do not include charges applicable to late repayments or expenses incurred for enforcement of a loan. 

The Need For A Short Term Loan

Short term loans can prove to be very useful in the following scenarios:

  1. Unpaid bills 

Many bills must be paid on a regular basis without delay, even if the customer does not have the funds necessary to pay them. Since short term loans carry a small amount and offer instant relief, many people use them to pay off outstanding bills. 

  1. Extra expenses

Sometimes, regular monthly expenses exceed income, in which case people usually dip into their savings. But for those who don’t have savings stacked away, short term loans offer the perfect solution. For example, a small loan of $500 for a period of 2 months can help many people pay for everyday expenses until the next paycheck. 

  1. Emergency expenses

Short term loans have a fast approval timeframe, which makes them ideal for emergencies such as health or repair and maintenance of a car. 

Tip: A loan finding service like Viva Paydays is able to provide accurate cost estimates for a loan, including all applicable fees and charges in addition to interest rate.

How To Apply For A Short Term Loan?

Most short term loan providers in Australia now have an online application system, offering both convenience and fast approval decisions. To apply for a short term loan, the first step is to visit the website of the chosen lender and accessing the application form. This can usually be accessed by clicking on the Apply button that most lenders have placed very prominently on their website.

Borrowers must make sure that the loan amount and repayment period they require is affordable for them. The inability to repay outstanding debt on time can severely jeopardize creditworthiness and prevent such borrowers from acquiring debt in the future. 

After filling out the application form with all required information, including any documentation that needs to be attached, applicants need to submit the application. Each lender has its own decision turnaround time, with some offering a decision as early as 30 minutes while others taking up to 48 hours. 

Once a loan application has been approved, lenders disburse the loan amount into the borrower’s bank account. The time it takes for the funds to be deposited depends on two factors: the time it takes for the lender to disburse the funds, and the time needed by the banking channels to process them. 


What is the term duration of a short term loan?

A short term loan is typically given out for a period between 16 days to one year. 

Do short term loans require any collateral?

Some short term loan providers will accept borrower’s assets as collateral against a loan, offering a lower interest rate in return. However, most short-term lenders don’t require collateral. 

Is a credit card or bank overdraft a better alternative to short term loans?

Credit cards or bank overdrafts are definitely suitable alternatives for borrowers looking for a short term loan. A cost comparison of all options should help in the selection of the best option. Keep in mind that credit cards and bank overdrafts don’t require any further approvals to be withdrawn, whereas borrowers need the approval of a lender to take out a short term loan.

Can a short term loan be used as a deposit for another credit product?

Yes, this is possible. However, this can cause severe financial troubles, and borrowers should seek the advice of a financial expert before making such a move.