Short-term and payday loans

Short-term and payday loans are small loans with short repayment terms. They are designed to give customers access to cash quickly, but it’s important to be aware of the risks and costs involved.

For example, payday lenders can charge very high fees of up to 20% upfront and 4% per month on loans of $2,000 or less, as well as default fees for missed repayments. Speaking to a financial counsellor for advice on managing your debt could be helpful, ideally before you consider applying for a payday loan. Free, confidential advice is available from the National Debt Helpline on 1800 007 007. You can get more information about payday and short-term loans from Moneysmart and Canstar, and Moneysmart offers a calculator that could help you work out the total cost of a payday loan. It’s likely there are cheaper ways to borrow money when you need it.

The table below displays some of the short-term and payday loans available in Australia, based on data collected by Canstar on 28 February 2022. While best endeavours have been made to ensure the information shown is accurate, the information should not be relied upon and you should confirm all information with the provider directly before making any decisions.

Important Information

1. Canstar does not rate or endorse short-term or payday loans and makes no recommendation about comparative features and benefits with respect to these products. For further information please visit the provider’s website.

2. Not all short-term or payday loans in the market are listed, and the table below may not include all features relevant to you.

3. The table below sets out factual information and should not be construed as general advice or personal product advice. Consider whether these products may be right for you. Canstar provides information about credit products. We’re not suggesting or recommending a particular credit product for you. If you decide to apply for a loan, you will deal directly with the provider, not with Canstar. Consider the Target Market Determination (TMD) before making a purchase decision. Contact the product issuer directly for a copy of the TMD. It’s important you check rates and product information directly with the provider. For more information, read our Detailed Disclosure and the Comparison Rate Warning.

4. The table below refers to three main types of fees that are commonly charged on a payday loan (a loan of up to $2,000 that has to be repaid in 12 months or less) or other short-term loan. These fees are:

• Establishment fee: A one-off, upfront fee which may apply to set up the loan. On a payday loan, this fee can be up to 20% of the amount borrowed, so $400 on a $2,000 loan. Establishment fees may be higher or lower on other types of short-term loans.

  Monthly fee: An ongoing fee that a lender may charge you each month until you finish paying off the loan. On a payday loan, this fee can be up to 4% per month, so $960 on a $2,000 loan paid off over 12 months. Monthly fees may be higher or lower on other types of short-term loans.

  Default fee: A fee that may be charged if you ‘default’ on the loan by missing a repayment due date set out in your contract. On a payday loan, the most you can be charged is twice the amount you borrowed, so $4,000 on a $2,000 loan.

Do you really need a loan today?~

It can be expensive to borrow small amounts of money and borrowing may not solve your problems.

Check your options before you borrow:

• For information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor
• Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan
• If you are on government benefits, ask if you can receive an advance from Centrelink: Phone: 13 17 94

The Government’s MoneySmart website shows you how small amount loans work and suggests other options that may help you.

~ This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.