Alternatives to Payday Loans in Australia

When money is tight and an expense cannot wait, a payday loan can look like the quickest way to fill the gap. The problem is that a small, short-term loan can become expensive once fees are added, particularly if you need to borrow again to get through the next pay cycle.

The good news is there are several alternatives to payday loans in Australia. Depending on why you need the money, options such as No Interest Loans, Centrelink advance payments, payment arrangements, hardship assistance or free financial counselling may cost less or avoid new debt altogether.

A personal loan can also be a payday loan alternative for some people with regular income and enough room in their budget for repayments. Credit24 offers online personal loans from $500 to $10,000 for eligible applicants, subject to assessment. Credit24 is an online personal loan provider, not a payday lender.

The best option depends on what you need to pay, how urgent it is and whether taking on a repayment will genuinely improve the situation.

Explore Credit24 personal loans

What is a payday loan?

A payday loan, also called a small amount loan, is generally a short-term loan of up to $2,000 that is repaid over a period of between 16 days and one year.

They are often marketed around convenience and fast access to money, which can be appealing when a bill, car repair or other essential expense cannot wait.

However, payday loans can be expensive relative to the amount borrowed.

Under Australian rules, licensed lenders may generally charge an establishment fee of up to 20% of the amount borrowed and a monthly fee of up to 4%.

MoneySmart gives the example of a $2,000 payday loan repaid over one year costing around $3,360 in total repayments.

That is why it is worth checking lower-cost options before applying.

Why look for alternatives to payday loans?

The issue with payday lending is not simply whether interest is charged. The combination of fees and a relatively short repayment period can put pressure on the next few pay cycles.

For example, if you borrow because there is not enough money to cover this month's bills, a large repayment next month may leave you short again.

That can create a pattern of:

cash shortfall → short-term loan → repayment pressure → another cash shortfall

Finding an alternative to a payday loan means looking for a way to solve the original expense with:

• No or lower borrowing costs
• More manageable repayments
• More time to pay
• Direct hardship support
• No new debt at all

Start with the lowest-cost option that actually solves the problem.

Best alternatives to payday loans in Australia

1. No Interest Loans

For eligible Australians, a No Interest Loan (NIL) can be one of the strongest payday loan alternatives for essential expenses.

No Interest Loans generally allow eligible applicants to borrow:

• Up to $2,000 for essential goods and services
• Up to $3,000 for a rental bond or certain natural-disaster recovery costs
  
  

Eligible expenses can include:

• Fridges and washing machines
• Furniture
• Car repairs and registration
• Medical or dental costs
• Education and employment expenses
• Computers and eligible technology
• Rental bonds

There is no interest and no fees or charges, so you repay only the amount borrowed.

A No Interest Loan is not unrestricted cash. You normally provide an invoice or quote and the approved amount is paid towards the relevant supplier or service.

Eligibility can include income limits, holding a Health Care Card or Pension Card, or having experienced family or domestic violence, along with demonstrating that repayments are manageable.

For someone who needs an essential item rather than cash for general spending, this should often be checked before commercial credit.

2. Centrelink advance payment

If you receive an eligible Centrelink payment, you may be able to receive part of a future payment in advance.

A Centrelink advance is not a normal personal loan. There is generally no interest or loan fee. Instead, the amount is recovered from future Centrelink payments.

That can make it a cheaper option than a payday loan for an eligible recipient who needs a relatively small amount.

There is still an important trade-off: your later Centrelink payments will be reduced while the advance is being repaid.

Before applying, check whether those reduced future payments will still leave enough for:

• Rent
• Food
• Utilities
• Transport
• Medication
• Other essential expenses

An advance that solves today's problem but leaves you unable to pay next month's essentials may not improve your position.

3. Ask for a payment plan or hardship support

If the reason you need money is an unpaid bill, one of the best alternatives may be to deal directly with the organisation you owe.

Before borrowing, contact the provider.

This may work for:

• Electricity and gas
• Water
• Phone and internet
• Insurance
• Council rates
• Medical or dental bills
• School expenses
• Existing loans
• Some fines
• Rent-related issues

Depending on the provider and your circumstances, you may be offered:

• Extra time to pay
• Smaller instalments
• A temporary payment arrangement
• Hardship assistance
• Fee relief
• A rebate or concession
• A changed repayment date
  

If the bill can be divided into manageable repayments without taking out another loan, you may avoid borrowing costs entirely.

Contact the provider early rather than waiting for missed payments and fees to accumulate.

4. Free financial counselling

If you are considering a payday loan because several bills or debts are already difficult to manage, another credit product may not be the most useful next step.

Financial counselling is free, confidential and independent.

A financial counsellor can help you:

• Review your income and expenses
• Work out which bills to prioritise
• Understand your debt options
• Contact creditors
• Request hardship assistance
• Respond to debt collection
• Understand insolvency options if necessary

You can contact the National Debt Helpline on 1800 007 007.

Financial counselling is particularly worth considering if you are:

• Borrowing to repay another loan
• Behind on several bills
• Using payday loans repeatedly
• Missing direct debits regularly
• Struggling to cover basic living costs
• Unsure how you can repay another loan

Getting advice early can create more options than waiting until debts have escalated.

5. A personal loan

A personal loan may be another payday loan alternative where you have regular income, the expense is legitimate and scheduled repayments fit comfortably within your budget.

Personal loans generally offer a defined amount and repayment schedule, which can make the debt easier to plan around than repeatedly taking out short-term credit.

When comparing personal loans, look at:

• The amount borrowed
• Interest or applicable fees
• Repayment frequency
• Loan term
• Total amount repayable
• Early repayment conditions
• Late-payment costs

Do not assume a personal loan is automatically cheaper simply because it is not called a payday loan. Compare the actual costs.

Credit24 can offer eligible applicants online personal loans from $500 to $10,000, with terms and costs provided before acceptance. Applications are assessed using information such as income, expenses, existing commitments and credit history.

A personal loan is unlikely to be the right solution if you are already struggling to repay other debts or need borrowed money for regular living expenses every month.

Compare Credit24 personal loans

6. Emergency savings or help from family and friends

Using savings means there is no loan repayment or borrowing cost afterwards.

Of course, not everyone has an emergency fund available when something goes wrong. If your budget is already stretched, telling you simply to “use your savings” is not particularly useful.

Where savings are available, consider whether using part of them for a genuine emergency is preferable to taking on expensive short-term credit.

Borrowing from a trusted friend or family member may also be an option.

If you do, agree clearly on:

• How much is being borrowed
• When repayments will start
• How much will be repaid each time
• Whether any interest or contribution is expected
• What happens if your circumstances change

Putting a simple agreement in writing can reduce misunderstandings.

7. Pay advance services

Pay advance services, sometimes called wage advance or pay-on-demand services, allow you to access part of money you have earned before your normal payday.

They can appear cheaper than some payday loans because they generally charge a transaction or service fee rather than conventional interest.

However, the cost still matters.

MoneySmart notes that pay advance services can charge a fee of up to around 5% each time the service is used.

There is also a cash-flow problem to consider: when payday arrives, the advance is deducted from that pay.

If you then do not have enough left for your normal expenses, you may be tempted to take another advance.

Pay advance services are therefore better viewed as a short-term cash-flow tool than a solution to an ongoing shortage of money.

8. Buy now, pay later or interest-free deals

BNPL or an interest-free offer can sometimes help with a specific purchase, but neither should be treated as free money.

They may be useful for an item such as an appliance where:

• The purchase is necessary
• All repayments comfortably fit your budget
• You understand the fees and conditions

They are generally less useful when you need:

• Cash
• Rent
• Debt repayments
• General living expenses

Australia's BNPL regulatory framework changed in June 2025, and BNPL contracts are now regulated credit products under the National Credit Code.

Even when a product charges no interest, account, application, late or other fees may apply.

Several small instalment plans can also become difficult to track.

Quick comparison: payday loans vs alternatives

Payday loan

Best for: Small short-term borrowing where other options have been considered
Typical cost: Potentially significant establishment and monthly fees
Main risk: Short repayment period and repeat borrowing

No Interest Loan

Best for: Eligible essential goods and services
Typical cost: No interest or fees
Main risk: Eligibility and permitted-use restrictions

Centrelink advance
Best for: Eligible Centrelink recipients
Typical cost: No interest or loan fees
Main risk: Reduced future benefit payments

Payment plan or hardship support

Best for: Bills and existing debts
Typical cost: Often low or no borrowing cost
Main risk: Conditions vary between providers

Financial counselling

Best for: Multiple debts or ongoing hardship
Typical cost: Free
Main risk: Not a source of cash, but may help solve the underlying problem

Personal loan

Best for: Eligible borrowers with regular income and a one-off expense
Typical cost: Interest and/or fees depending on the product
Main risk: Adds another ongoing repayment

Family or friend loan

Best for: Smaller expenses where help is available
Typical cost: Potentially none
Main risk: Relationship pressure

Pay advance

Best for: Short timing gaps against earned wages
Typical cost: Service fee
Main risk: Leaves less money on the next payday

Which payday loan alternative should you choose?

A useful way to decide is to start with why you need money.

If you need an essential appliance, car repair, dental treatment or similar expense and meet the criteria, check a No Interest Loan first.

If you receive Centrelink and need a relatively small amount, check whether an advance payment is available.

If the issue is an electricity, phone, medical or other bill, contact the provider and ask for a payment arrangement or hardship support.

If several debts are already overdue, speak with a financial counsellor before borrowing more.

If you have stable income, need funds for a genuine one-off expense and can comfortably afford repayments, a personal loan may be considered.

If the purchase can wait, saving or delaying it may be the least expensive option.

What to avoid when looking for payday loan alternatives?

Be cautious of advertisements promising:

• Guaranteed approval
• No checks at all
• Approval regardless of income
• “Instant approval for bad credit”
• Unclear fees
• Requests for money upfront before receiving a loan
• Pressure to apply immediately

A payday loan alternative for bad credit can still be expensive. The label does not determine whether the product is good value.

Before using any commercial lender, check:

• Who the lender is
• Whether it is appropriately licensed
• The total repayment amount
• Interest and fees
• Repayment dates
• What happens after a missed payment
• Whether the repayment fits your normal budget

Avoid rolling one short-term loan into another simply to keep up with repayments.

Credit24 personal loans: a possible alternative to payday loans

Credit24 is an Australian online personal loan provider, not a payday lender.

Eligible applicants can apply for personal loans from $500 to $10,000, subject to responsible lending assessment.

Learn more about Credit24 :

• A 100% online application
• Loan amounts from $500 to $10,000
• Flexible repayment terms depending on the product
• No early repayment penalties
• 60 seconds payout^ to eligible Osko-participating banks, if approved

Applications are assessed using relevant information about income, expenses, debts and affordability.

A Credit24 personal loan may be considered for an urgent but manageable one-off expense. If you are already struggling with several debts or borrowing to cover everyday living expenses, contacting your creditors and speaking with a free financial counsellor should come first.

Frequently Asked Questions

What are the best alternatives to payday loans?

Options include No Interest Loans, Centrelink advance payments, payment arrangements, hardship assistance, free financial counselling, personal loans and help from family or friends. The best choice depends on what you need the money for, eligibility, urgency and whether repayments are affordable.

Are No Interest Loans better than payday loans?

For eligible borrowers with an approved essential expense, a No Interest Loan is generally much cheaper because there is no interest or fees—you repay only what you borrow. However, No Interest Loans are restricted to eligible goods and services and are not unrestricted cash loans.

Can I get a payday loan alternative with bad credit?

Possibly. Start with options that do not depend on ordinary commercial credit, such as payment plans, hardship assistance, No Interest Loans or financial counselling. If considering a personal loan, approval will still depend on factors such as income, expenses, debts, credit history and affordability.

Is Credit24 a payday lender?

No. Credit24 is an Australian online personal loan provider offering personal loans and a line of credit. Applications are subject to eligibility, verification and responsible lending assessment. Credit24 should not be described as a payday lender or no-credit-check provider.

Should I use a personal loan instead of a payday loan?

A personal loan may be worth considering when you have stable income, need funds for a one-off expense and can comfortably afford the repayments. It may not be appropriate when you are already in financial hardship or borrowing to repay existing debts.

What should I do if I already have payday loan debt?

Contact the lender early and ask about hardship assistance if repayments are becoming difficult. Avoid taking another payday loan simply to repay the first. The National Debt Helpline on 1800 007 007 can provide free financial counselling and help you work through your options.

Sources

The following reputable Australian sources were used to research and verify this article:

• ASIC MoneySmart — Payday loans
• ASIC MoneySmart — No Interest Loans
• Services Australia — Advance payment
• ASIC MoneySmart — Financial counselling
• National Debt Helpline — Payday loans
• ASIC MoneySmart — Pay advance services
• ASIC MoneySmart — Interest-free deals
• ASIC — Buy now pay later credit licensing
• Credit24 — Personal loans