Very high costs
These types of loans have very high fees (20% of the amount borrowed + 4% per month), which translate into very high annual interest rates. Payday lenders are not legally required to tell you the annualised interest rate.
And then there are all the fees and charges that are only explained in the small print! For example, some payday lenders will charge you $7 per day for late payment.
Payday loans are far more expensive than personal loans from mainstream banks (which usually have an annual interest rate between 8 and 15%).
- See exactly how much a payday loan will cost you with MoneySmart’s Payday Loan Calculator
- If you're eligible for Centrelink benefits, you may be able to get an interest-free advance payment on your benefits.