Low Cost Payday Loans
Even when you need funds fast, it’s worth considering the cost of borrowing. Here are some ways you can keep it down.
- Borrow up to $5,000
- Outcome in 60 seconds
- Flexible repayments
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We’ve all been there. Disaster strikes, and you need funds fast to solve a crisis. Sudden costly car repairs can make it challenging to work. An injury or illness can wreak even more havoc on your income. Pets, owning a home, kids, appliance repairs, and running your household – all can throw up unexpected and unwelcome events and costs. When you need to address a problem, but you don’t want to spend a fortune – low cost pay day loans offer the freedom of softening the blow.
Low cost payday loan borrowing – shorter-term versus longer-term
Payday loans owe much of their affordability to capped fees – but that’s not where the benefits stop. Along with a structure that makes it instantly easy to work out borrowing costs, payday loans offer much to busy consumers. When you’re looking to find a solution to a temporary cash flow problem, you want something fast. Cash loans can indeed be arranged quickly – but you need to be able to work out what you’re going to pay swiftly too. Payday loans have you covered there.
- Payday loan repayment fees are capped at 48% of the loan amount over the course of 12 months
- Establishment fees are capped at $400 and built into your repayments
Understanding low cost payday loan options
Payday loans are structured to provide relatively cheap shorter-term borrowing. That means they work best when you don’t need a long-term solution. Because fees get capped as a fraction of the loan amount, you get charged per repayment – not by using an annual percentage rate like with personal loans for larger sums. Think of it like this – if you’re setting up a payday loan with monthly repayments, you’re paying a monthly fee to the lender. That’s how the lender makes money. Therefore, it follows that the fewer repayments you make, the lower your borrowing costs.
Personal loan lenders, like banks, make their money differently. They set a longer minimum repayment period (usually, personal loans run from two to seven years), and interest gets charged annually – they don’t have a fixed fee per repayment. They often charge a lower rate, but it adds up over the period of the loan.
Whichever of the two routes you choose to borrowing, you’ll always need to meet an associated cost. With a low cost payday loan, however, reducing the repayment period is the best way to keep your costs down. Let’s take a $2,500 payday loan and assume you’re paying it back over ten months:
- Establishment fee capped at $400
- Capped monthly fees mean ten payments of $100, in addition to your establishment fee and the loan principal of $250 per month, result in a total of $390
- Maximum amount you’ll pay in fees – if you make your payments on time – is $1,400
Now let’s look at that same $2,500 payday loan and reduce your repayment term. Instead of spreading the cost of your purchase over ten monthly pay periods, you opt for just four:
- You again pay a maximum establishment fee of $400
- Four monthly payments of $825
- Maximum amount you’ll pay in fees – if you make your payments on time – is $800
That’s a saving of $600, which is a significant amount. The lowest cost payday loan borrowing is when you repay as quickly as you can afford. They represent a very sound way to borrow funds over shorter periods.
Is it possible to get cheap secured payday loans?
Some loan providers offer the option of securing your borrowing against a valuable item. However, this isn't the case for payday loans, which are unsecured. Borrowers need to think very carefully about securing property against a loan. There are several reasons for that:
- When you use an item as collateral, you risk losing it. Life, careers and finances are unpredictable. Think about whether you can afford to lose your car, for instance, if you use it for work
- In some cases, you may be offered a cheaper loan if you offer a car or other high-value item as collateral. However, in such cases, it might be more sensible to build your borrower reputation with the lender by starting small. No matter what size loan you take, repaying it on time will improve your credit rating. In addition to that, your lender will see you’re reliable. They’ll probably be willing to let you build your borrowing amounts over time, without the need for security
- Secured loans are slower to arrange than instant payday loans. When you apply for a low cost payday loan, the process is primarily limited to the lender assessing your documents. That makes for fast turnarounds of applications. Lenders mainly need to see that you can afford the loan. Adding an item as security to the equation means there’s more work to do – and the process takes longer as a result.
What do Australian payday loan borrowers use funds for?
Payday loans can be used for a variety of purposes. Australians utilise payday loans to meet all sorts of planned and unexpected costs. Taking out an unsecured loan means you’re not limited when it comes to spending funds. When you need to spread the cost of repairs to your car or home, higher-than-normal gas or electricity bills, medical or dental expenses – and a whole host of other things – payday loans are the go-to option.
How do I apply for a payday loan?
Applying for a payday loan couldn’t be any more convenient. Online loan providers offer easy applications. Digital document submission makes the process quicker than traditional forms of lending. Your application will take minutes, and your funds will be with you in no time.
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Disclaimer:
The information on this website is of general nature and does not take into consideration your objectives, financial situation or needs.
For loans between $2,050 and $5,000, the APR is between 21.24% (minimum) and 48% (maximum) per annum. Comparison rate of 65.4962%. Minimum term is 16 days and maximum term is 24 months. The cost of the loan is a $400 establishment fee and monthly interest charged on the amount borrowed. For example, a loan of $3,000 over 3 months with an APR of 48%, (comparison rate of 65.4962%), will have an establishment fee of $400, monthly repayments of $1,225.20. Total repayments of $3,675.60 and total interest payment of $275.60.
Warning: A comparison rate indicates the true cost of a loan. Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
