Payday loans provide an alternate credit option for thousands of Australians who need quick cash. These are generally small loans, with a short repayment period and a high interest rate. Payday loans can often be approved within minutes of applying, and borrowers could have the money in their account within hours. Payday loans are, however, not for everyone. There are significant downsides to payday loans, and they can often end up leaving borrowers in a bad financial position.
Payday loans are becoming an increasingly popular credit option for Australians. Payday lenders have, however, been characterised as being both misleading and predatory. So, if something unexpected happens and you find yourself needing fast finance, what is your best option?
What are payday loans?
A payday loan is a high-interest, short-term loan. These loans will have a short repayment term, usually around 4-weeks.
Typically, payday loans are repaid through:
- 1. The lender setting up a direct debit from your bank account, or;
- 2. A portion of your pay is automatically deducted each pay-cycle.
These loans, in some situations, can feel like a saving grace. However, payday loans often come with eye-watering interest rates and a fine print minefield of oppressive fees and charges. Learn more about Nifty Bad Credit Loans here.
It is not uncommon for people who take out a payday loan, to find themselves owing double of the original loan value. It doesn’t take long for repayments to spiral out of control, and for borrowers to find themselves in a worse position than they were before their loan.
Alternatives To Payday Loans
If you are thinking of borrowing from a payday lender, you should first consider the other options available to you. While the ease of payday lender may seem initially attractive, they could, in the long run, do a lot more damage than good.
So, before you get in contact with a payday lender, consider the following:
Get in contact with your utility provider:
Many utility companies have a hardship office that can help negotiate alternate payment options. So, if you feel you are unable to pay an electricity, water or gas bill, get in contact with your provider.
Apply for a Centrelink advance payment:
If you receive government benefits, you may be entitled to apply for an advance payment. This is simply an advance on your benefits that will be repaid out of future Centrelink payments, interest free. To find out if you are eligible, visit the Department of Human Services website.
Get a no interest loan:
There are certain creditors who provide no-interest loans. These are often set up as a charity initiative. You may qualify for a no interest loan if you are on a low income, and need to pay for household necessities or essential medical treatment.
Apply With Nifty:
You could, additionally, apply for a loan with Nifty. Nifty provides the ease of an online lender, while also complying by responsible lending practices. Nifty offers reasonable interest rates as well as transparency.
How Do No Credit Check Payday Loans Work?
Typically, the goal of these high-interest, short-term loans are intended to boost your cash flow until your next payday arrives. You hand over a blank cheque and a copy of your driver’s licence and you can be approved, no credit checks – nothing! That may sound like a dream, but there is a chance the borrower could dig themselves into debt they may battle to escape from.
Many payday lenders will offer borrowers these ‘no credit check loan’. Borrowers should be wary of lenders who offer no credit check payday loans. Performing credit checks is part of responsible lending practices.
Are Payday Loans Dangerous?
Lack of responsible lending practices
Perhaps the most dangerous of the payday pitfall is the accusations of irresponsible lending practices associated with this type of loan and the industry’s reputation for preying on vulnerable individuals. Their services are typically targeted towards poorer communities, with fewer means to repay the payday loan.
Must repay the loan as soon as possible
If you are able to repay your loan on time then you won’t incur large fees, however, failure to repay your loan could incur additional costs and fees that could lead to a spiral of financial hardship. This risk is often increased with shorter loan terms, as the weekly or fortnightly payments are much higher over shorter periods.
Payday Loans and potential effect on mental health
With the pressure of repaying your loan over a rather short period of time and the temptation to extend your loan if you cannot repay it makes it easy to fall into the trap, which can all have a negative effect on your mental health is the large repayments are causing you stress.
Chance of falling into unmanageable debt
With the readily available option of taking out a loan each pay cycle after your previous one is paid, many who take out these short-term loans fall into debt spirals.
How Google protects customers from payday lenders
With the rise of payday lenders, the internet has become a playground for the industry. With Facebook and Google ads, finding a lender is far too easy. In May 2016, Google addressed this problem by imposing a ban on all short-term loan advertisements. In addition, the ban includes any borrower that requires customers to repay their loan in 60 days or less. It also requires all lenders to display a disclaimer on their site stating their loan terms and whether they work with third parties.
ASIC also requires lenders to conduct thorough, reasonable inquiries into applicants financial situation. Furthermore, with the increase of regulation surrounding short-term lenders, we have seen healthier alternatives for pay loans pop up!
So, it seems these loans are a definite no-go!
You may be asking what other options are open to you when pesky financial problems arise. Well, don’t fret just yet, there are healthy alternatives to a payday loan.
Apply for traditional small loans with a longer repayment period here
Payday Loans Online or Nifty personal loans?
Nifty Loans offer personal loans for those who need a financial pick-me-up. We access applications quickly and efficiently, keeping in mind that every situation is unique. A Nifty personal loan offers many of the convenient aspects of a payday loan, while also providing the security of a responsible lender.
|Comparison||Nifty Loans||Traditional Payday Lender|
|Loan Amount||Up to $5,000||Up to $5,000|
|Loan Terms||Minimum 3-months||4-weeks|
|Same Day Approval||Yes||Yes|
Why apply for a personal loan?
There is a myriad of reasons why applying for a personal loan may help your situation. Much like borrowing money off your credit card whilst you’re short of funds, a personal loan can act as a helping hand in pesky financials muddles.
Reasons to apply for a personal loan:
- Medical bills
- New or used car
- Car repair or to pay hefty rego bills
- Broken down appliances
- Other Unexpected bills
- Fund your next travel adventure
- Pay the steep cost of rental bond
- Pesky dental bills (we all have them!)
How does Nifty loans differ?
Nifty is a small personal loans company. We are a far cry from the neon signs you see advertising short term loans. Our business is 100% online. We have a dedicated customer service team that is ready to answer any questions regarding your finances.
Let’s take a closer look at how Nifty loans differs from traditional payday lenders:
Nifty adheres to responsible lending
We use data to verify your income and expenses
Some short-term lenders allow their consumer to enter their income and spending habits manually, cultivating a system where desperate borrowers lie to get approved for a loan. To avoid these loan pitfalls, Nifty utilises the latest in safe banking technology to access a read-only view of your bank statements and spending habits. From this, we can use confirmed and verified information. The safety of your information is of utmost importance to us, so no need to fear, we will safeguard your privacy.
We offer Financial hardship
When our customers are suffering from financial hardship we can set up a repayment plan or hardship agreement to help them get back on track.
We do perform credit checks
When we access a personal loan application, we do conduct credit checks. However, they are only one piece of our master approval plan. To give the right help to clients who need it and can afford to repay their loan principal.
We have minimum requirements before you can apply for a personal loan
Nifty wants to provide small loans to people who require financial assistance, however, can also afford repayments. We do not lend to clients who have proven they cannot pay back the loan principal. To avoid clients who we cannot approve applying for our personal loans, we have devised four basic minimum requirements for our loan application:
- You must be at least 18 years old
- Must be an Australian citizen or permanent resident
- You’ve been receiving a regular income into a personal bank account for at least 3 months.
- Have an active phone number or email address
In addition, simply because an applicant may meet these requirements doesn’t secure an approval. Furthermore, we do perform credit checks and apply a diligent approach to our responsible lending practices.
choose your preferred repayment plan
When you apply for a loan through Nifty Personal Loans, you can select your preferred payment term. We encourage all your applicants to choose a plan that realistically works with other financial commitments they have. Our friendly customer service is ready to help any applicant with questions they have regarding their loan application and the terms we offer.
Flexible loan terms
Nifty loans offer flexible loan terms for all applicants. Customers are not restricted to a 16-day loan term. Our minimum loan term is 3 months with a maximum of 24 months.
Supportive customer service team
Nifty loans have a friendly and dedicated customer service team. Whether you need to have a chat with a human or simply want your questions answered, Nifty’s customer service is here to assist.
Furthermore, providing financial services that are helpful and contribute to someone’s livelihood should be the main purpose. These financial services should avoid payday loans as mentioned before. Services that are transparent about costs, and are available to discuss any questions or inquiries you may have.
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