Weekend loans: What to know before you sign up

Yikes. It’s the weekend tomorrow and you need fast cash. Should you get a weekend loan to cover you? Here are some things you need to know before applying.

In this guide:

• What is a weekend loan?
• How do weekend or payday loans work?
• Weekend loan rates and fees
• What are some alternatives to weekend or payday loans?
• What to look out for when applying for a weekend loan

What is a weekend loan?

A weekend loan is just another name for a cash loan. You could also see this type of loan referred to as a payday loan, short-term loan or fast loan. Fast loans like these get their name because they generally have fast turnarounds.

They tend to have a fairly quick application process, and if approved, the money could be in your bank account between one hour and one business day. Therefore, a ‘weekend’ loan might appeal to people who are cash-strapped heading into the weekend, and in need of fast cash to cover an emergency or unexpected expense (like home repairs). However, they aren’t the cheapest option for finance and can come with strict terms and big fees. Moneysmart warns if you take out one of these loans, you’ll end up needing to pay back “a lot more than you borrowed”.

How do weekend or payday loans work?

A weekend or payday loan is a small loan amount, generally up to $2,000, that must be repaid within a period of between 16 days and one year. They’re often set up to schedule repayments in line with your pay cycle (whether that’s weekly, fortnightly or monthly), either as a direct debit or as a deduction from your pay.

Some lenders accept applications in person and online. If your loan application is approved, the funds could be in your bank account within an hour (depending on the lender and the time and day of the week, of course). Cut-off times generally apply, especially heading into weekends, so you’ll need to check each lender’s process.

Weekend loan rates and fees

As weekend loans are a type of payday loan, licensed lenders aren’t allowed to charge interest, but they can charge a lot in fees. According to Moneysmart, most payday lenders charge an establishment fee of 20% of the amount borrowed and a monthly fee of 4% of the amount borrowed. For a $2,000 loan, that’s a $400 establishment fee and $80 for the monthly fee. So, if you take out a payday loan for $2,000 and take 12 months to pay it back, you could be charged $1,360 in fees, plus need to pay back the $2,000, according to Moneysmart.

Other fees payday lenders can charge include:

• default fees or charges, which cannot be more than double the total amount borrowed
• enforcement expenses (if the lender has to take you to court for failing to repay the loan)

What are some alternatives to weekend or payday loans?

Before applying for a weekend loan, consider if there are other options that may be suitable for you. Moneysmart suggests the No Interest Loans Scheme (NILS) or a Centrelink advance payment may be cheaper options if you are eligible and need to get money fast. Utilities relief grants or household relief loans may be available. If you are in financial difficulty, you can contact credit and utility providers to talk about hardship arrangements, such as getting an extension on your bills. You can also call the National Debt Helpline for free, independent financial counselling and advice on 1800 007 007.

What to look out for when applying for a weekend loan

It’s an Australian Government requirement under the National Consumer Credit Protection Act 2009 that payday lenders display a warning message to potential applicants. Generally, all forms of payday loans are considered riskier and more expensive than other types of loans. They can sometimes be easier to obtain for people with a poor credit score than some other types of credit, because in some cases these lenders will not conduct a credit history check or require any collateral or long-term commitment.

You might ask yourself:

1. Do I really need a loan today?

As a weekend loan could end up costing significantly more than the amount borrowed, they should be considered as a last resort. Moneysmart says that if you need to get money fast, there may be cheaper options than a payday loan, such as the examples listed above.
A first step could be to call the National Debt Helpline for free, independent financial counselling and advice on 1800 007 007.

2. Am I eligible for a weekend loan?

Lenders will have different criteria, but applicants generally need to meet the following minimum criteria:

• be over 18 years old
• be an Australian citizen or permanent resident
• earning a regular income (which can include Centrelink benefits but it must not be your main source of income; i.e., more than 50%

3. Can I meet the repayments?

Weekend loans tend to have shorter repayment periods, so it’s important to make sure you can afford to meet the regular repayments. Remember too, that repayments for fast loans are often set up as direct debits or deductions from your pay, so you’ll need to work out if you’ll have enough money in your account to cover the repayments and other living expenses each time.

Moneysmart provides a payday loan calculator to help you work out how much it may cost you.

4. Is the payday lender reputable?

Payday loans are typically available from non-traditional lenders. Check that the lender has a credit licence listed, and that all fees and charges are clearly shown.

Before applying for a weekend loan, it’s important to consider all your other options and, if you really need the money urgently, whether there is a cheaper way for you to access it. Further, if you’re considering a weekend loan because you’re concerned a poor credit score will affect your application for other types of loans, it’s worth considering whether taking out this type of loan is a good idea at all.

The National Debt Helpline says payday loans bring very high costs, a risk of needing to borrow again to repay the loan and high default fees. They can also negatively affect your credit score if you aren’t able to make the repayments, plus be difficult to get out of. Speaking to a financial counsellor for advice on getting your debt under control could be helpful, ideally before you consider applying for a weekend loan. Free, confidential advice is available from the National Debt Helpline on 1800 007 007.

→ Related article: Payday loans: what to look out for

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