Short Term Loans

Payday loans in Australia: everything you need to know

What is a payday loan?

A payday loan is a short-term loan usually repaid on the borrower’s next payday or whenever income is received from other sources, like a pension.¹ But it can typically be repaid anytime between 16 days and a year from the date the loan was issued depending on the terms of the payday loan agreement.²

Although payday loans may seem like a good short-term plan to deal with your financial woes, they can end up costing you in the long term. Therefore, it’s important you understand how payday loans work in detail before you borrow any sum under this lending option.

Credit24: an alternative to payday loans

How does payday loans work?

Payday loans, also known as small-amount loans, vastly differ from personal loans and other types of loans in the way they function. Getting a small payday loan in Australia can be easier than other financing options because the lenders don’t conduct a credit check and typically only ask for identification, a bank account, and a steady paycheck. You can even get payday loans online.

People usually resort to these loans when they don’t have any other financing option at their disposal. Payday loans are also preferred by people with poor credit history or lack of assets since it makes it difficult for them to take out a low-interest personal loan. You can use payday loans to pay for repairs, medical bills, or any other urgent expense.

Payday loans costs

Payday loans can be expensive. Even though payday lenders can’t charge interest on loans under $2,000, they may impose quite a few additional charges that add to your total payday loan cost. There are, however, caps on the fees of a lender can charge on payday loans in Australia.³

Establishment fee Maximum 20%
Monthly fee Maximum 4%
Default fee Maximum 200%

For example, if your salary is due in 20 days and you don’t have sufficient funds to pay off a $500 medical bill, you may approach a payday lender for a payday loan. If they charge a 20% establishment fee and a 4% monthly fee on the loan, you’ll need to repay $100 as the establishment fee and $20 as the monthly fee for every month you don’t repay the loan. The default fee can cost you up to $1000.

Are payday loans secured or unsecured?

Payday loans are typically unsecured and don’t require any collateral but can quickly lead to debt accumulation due to their high cost.⁴ The overall risk involved with taking out a payday loan can also be high, so you should do proper research on its terms and conditions to determine if it’s the right choice for your current financial situation.

Payday Loans: fixed or variable?

You can get a payday loan for a fixed fee.⁵ So, instead of a floating interest rate, you’ll only need to pay a fixed fee based on the terms of your payday loan agreement. This is because a payday loan is generally repaid in the form of one lump sum amount instead of several small instalments.

How to get a Payday loan

You can apply for a payday loan in Australia if you:

  • are 18 years of age or above
  • are an Australian citizen or Permanent Resident 
  • have a regular source of income for at least three months before applying ⁶

To get a payday loan, you must show proof of stable and regular income, usually your pay stubs. Based on your paycheck history, the payday lenders will loan you a certain amount of funds. You can pay back the loan within one year based on the lender’s agreement.

Can’t pay back your payday loan?

If you’re unable to pay back your payday loan, we don’t suggest you take out another payday loan. Instead, you should try and work out alternate payment plans to repay your loans without piling more high-cost debts. 

You can talk to a financial counsellor to help you sort out your financial issues. Many non-profit organisations offer free and confidential financial counselling services. You can reach out to them using the information below:

  • National Debt Helpline: If you’re stressed due to debt problems, you can call 1800 007 007 to get help to set your finances back on track. The helpline is available on weekdays from 9:30 AM – 4:30 PM and live chat counselling is available on weekdays from 9:00 AM – 8:00 PM.⁶
  • Community Legal Centres Australia: It’s an independent non-profit organisation that provides high-quality and free legal advice to people dealing with financial difficulties and hardships. You can connect with them over a call (02 9160 9500) or email (

Mob Strong Debt Helpline: It’s a free legal advisory service helping the Aboriginal and Torres Strait Islander people with financial matters. The helpline number is 1800 808 488 and it’s available between 9:30 AM and 4:30 PM on weekdays. If you’re in debt or struggling with finances, you can contact them.

Credit24: an alternative to payday loans

Credit24 is an excellent alternative to payday lending options. We don’t charge any interest for small loans of up to $2,000. If your application is approved, you’ll only incur a 20% establishment fee and a monthly fee of 2% – 4% on the loan amount.

We also provide other loan options for urgent medium and large expenses. You can apply for a medium loan between $2,001 and $5,000 with an interest rate ranging from 24% to 48% per annum. You’ll only pay a flat $400 establishment fee with repayment terms between 12 months and 24 months. 

For large loans, you can apply to get any amount between $5,100 and $10,000 with a 24% to 48% interest rate. The repayment terms are between 12 months and 36 months.

The key benefits of getting a loan from Credit24 are:

  • Secure online application
  • Quick and easy process
  • Fixed repayments
  • Upfront and transparent costs 
  • Same-day payment
  • 24*7 Chat support

Credit24: an alternative to payday loans

IPF Digital Australia Pty Ltd, trading as Credit24, ABN 59 130 894 405. Australian Credit Licence 422839. The information in this article is of general nature and does not take into consideration your objectives, financial situation or needs. Lending criteria, fees and charges apply. For more information about our products, eligibility criteria and terms and conditions, please visit


  1. Investopedia, What Is a Payday Loan? How It Works, How to Get One, and Legality
  2. MoneySmart: Payday loans
  3. Australian Securities & Investments Commission: Loans and credit cards
  4. Bankrate, Payday loans vs. instalment loans: One is a much better option
  5. NerdWallet, What Is a Payday Loan and How Does It Work?
  6. Tippla, Understanding Payday Loans in Australia