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 that's not including all those fees and charges in the small print! For example, some payday lenders will charge you $7 per day for late payment.
Payday loans are way more expensive than a personal loan from a mainstream bank (usually with an annual interest rate between 8-15%).
- 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.