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Payday Loans Pitfalls And Nifty Loans

Payday loans in Australia

The rules around payday loans have changed in recent years. These days, most people looking for this type of finance are really looking for small personal loans. In this article we’ll run you through payday loans pitfalls and what you need to know about applying for finance here at home!

payday loans pitfalls

What is the history behind payday loans?

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.

Nevertheless, payday loans technically no longer exist. They have been replaced in Australian legislation by the term “small-amount credit contracts”.  However, SACCs are still commonly referred to colloquially as payday loans. There are significant downsides to payday loans, and they can often end up leaving borrowers in a bad financial position, due to many payday lenders’ questionable practices. Payday lenders have been characterised as being both misleading and predatory. Therefore, the regulation of payday loans changed. This was a governmental attempt to protect consumers. 

On the other hand, payday loans are becoming an increasingly popular credit option for Australians. 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. Especially if you have bad credit. If you are looking for bad  credit loans, you can also 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 lenders may seem initially attractive, they could do more damage than good in the long run.

So, before you get in contact with a payday lender, consider the following:

1. 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.

2. 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.

3. 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.

Consider a personal loan with Nifty

Nifty Loans offers personal loans ranging from $300 to $5,000 that can be used to cover a range of urgent expenses. Unlike traditional payday loans, Nifty’s loans have a starting term of 6 months, and depending on the loan type can go up to 24 months. Nifty provides the ease of an online lender, while also complying by responsible lending practices. Nifty offers reasonable interest rates on our loans as well as transparency. 

What is responsible lending?

Responsible lending refers to trustworthy and reliable lending practices that protect the consumer from default and fraud. Nifty adheres to responsible lending practices and believes in 100% transparency. This means we won’t offer loans to people that we believe can’t afford to pay it back. Also, the interest rates, costs and fees associated with our loans are clearly outlined in our loan contracts. Additionally, we use the newest technology to securely access and verify your income and expenses.

Payday loans pitfalls

Lack of responsible lending practices associated with payday loans

When it comes to payday loans, perhaps the most dangerous pitfall is the accusations of irresponsible lending practices. Additionally, 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. This can be true for some businesses in the industry, but certainly doesn’t mean all small loan providers are bad. 

<h2Are no credit check payday loans a good idea?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 loans’. Borrowers should be wary of lenders who offer no credit check payday loans, due to the pitfalls that come with it. Performing credit checks is often part of responsible lending practices and can provide vital information to help responsible lenders make good decisions.

Google protects customers from payday loans pitfalls

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 “Payday 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.

Legal Requirements for short term loans

ASIC also requires lenders to conduct thorough, reasonable inquiries into applicants financial situations and the reason for the loan. Furthermore, with the increase of regulation surrounding short-term lenders, we have seen healthier alternatives for pay loans pop up! Other legal requirements that small amount lenders include the following. 

  • At least 90 days’ worth of bank statements must be obtained by law when applying for a small amount credit contract loan. This allows for an accurate assessment of verifying income, spending habits and how a customer is currently handling their money. 
  • For people who receive Centrelink income, there is a protection in place which means no more than 20% of their income is spent on short term loans. Having this in place means it blocks all income from being used for repayments. 
  • There are presumptions of hardship if it can be seen that a customer is struggling to make repayments and defaulting to current short term loans. This can demonstrate that the individual is experiencing financial hardship and an additional loan would place them in a worse position. 
  • There is also a presumption of hardship should a customer have received multiple short term loans in a short amount of time. Having several loans at once could be seen as hardship as they are trying to find money fast and also taking into account all repayments.
  • It should be noted that there are processes that can be followed to rebut the above two points as to not exclude people from accessing credit where they are not in fact in financial hardship.

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 traditional payday loan.

Apply for 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 $2000
Loan Terms Minimum 6-months 4-weeks
Hardship Support Yes Yes
Online Yes No
Same Day Approval Yes Yes

Why apply for a Nifty personal loan?

There are a myriad of reasons why applying for a personal loan may help your situation more than a traditional payday loan. 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 financial muddles.

Reasons people apply for a personal loan:

How do 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.

Nifty loans differs from traditional payday lenders in many aspects:

1. Nifty utilises the newest in banking technology

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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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 6 months with a maximum of 24 months.

7. 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.

8. Quick personal loans

Nifty are just as quick as lenders that provide no credit check payday loans. The only difference – our personal loans are safe and affordable. If you apply for one of our personal loans within our business hours, we could give you an outcome in only 60 minutes*. Even better – if you’re approved, you could have your funds in your nominated bank account in just 60-seconds**! 

This is what we call Nifty Loans! 

Keep in touch!

Want to keep in touch with Nifty’s weekly discussion of relevant topics? Well, follow us on Facebook. You can head over to our blog to find out more about the Facebook hacking scandal and the Commonwealth games

Learn more about our loans. We could offer you loans for people on Centrelink and even bad credit loans!

Avoid payday loans pitfall – apply with Nifty today!

*If you apply during our regular business hours and we don’t require any additional documents

**Only available for NPP-enabled bank accounts


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Andy Andy


Andrew Bell

Since founding Nifty in 2016, Bell has continued to make waves within the local financial sector for his continued ambition and willingness to adopt emerging technologies.

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