Best Small Loans Australia

No matter if you're looking for a cash loan in Adelaide, Sydney or Melbourne, the cash loan industry in Australia is quite large. It's estimated that more than one million Australians took out small loans last year. Due to there being such a large demand for this service, it has resulted in a large number of lenders in this space, so how do you select the right one?

Firstly, regulators have placed strict consumer protections through Consumer Credit Legislation Amendment (Enhancements) Act 2012 for small loan lenders. The provision includes the following:

• Lenders are capped & only permitted to charge a fixed amount set by the regulator for a loan. This is a maximum establishment fee of $400 and maximum monthly fees of no more than 48% of the loan amount over 12 months.
• Loans up to $2,000 that previously were required to be paid within 15 days has been banned.
• If you default on a small loan, you cannot be charged more than the original loan amount on top.
• Responsible lending applies, meaning that the lender cannot place you into another loan if you are already severely in arrears on a current loan.

Considering all the above legislation, with a tightly controlled and regulated pricing structure, it shouldn’t matter which company you use, right? One could assume this, but that wouldn’t be wise – while these regulations provide a guideline for the maximum amount a lender can charge, they don't factor in lender-to-lender price and policy competition.

Pricing

Whether you're chasing a cash loan in Perth or Broken Hill, every customer is different, and most lenders work on a ‘Rate for Risk’ basis. What this means is that if you're determined to be of less risk for a particular lender, they'll reward you with a cheaper rate. If they deem you to be of higher risk due to a previous default or a recent slow account on another small loan, they may still be prepared to lend to you, but they may charge you a higher rate.

Some small personal loan lenders have different tiers starting with cheaper establishment & monthly fees going up to the maximum from there.

When you're looking at loans from $2,050 to $5,000, rates can start for low-risk customers at 12% excluding fee’s going up to the maximum 48%, excluding fees.

Credit policy

Some lenders specialise in bad credit and are only prepared to lend to a higher risk. Those lenders will generally charge the maximum amount due to the high risk, but for that customer, fees and charges may not be important, making getting the loan at a slightly higher rate worth it, considering what it may cost to not have access to those funds at all. These lenders focus more attention on your income/expenses rather than your credit score. Other customers who have strong credit scores should be reviewing fees, charges and terms to drive the cheapest price. A good credit score shows that it's unlikely the lender will have issues with collections and should, therefore, be able to provide you with better pricing.

After sales support

Apart from fees and charges, you want to select a company that is reputable, has time in the industry and builds a relationship with its clients. Reviewing testimonials online through product review, Google reviews or any other platform is advised. Reading these reviews will give you great insight as to what your experience will be like, based on what previous customers have experienced.

Flexibility

What kind of flexibility does your loan offer? Does it offer extra repayments without fees? Can you out your loan early without discharge costs? These are areas that need to be reviewed.

We are proud as Savvy to partner with many of Australia’s most reputable small loan lenders. We have a diverse panel that can help out all different types of customers and profiles, some that reward strong credit scores and others that are prepared to look outside the box to get the difficult application across the line. All of our lenders are reputable with many years of experience. They have high customer satisfaction ratings and provide loan flexibility.