Payday Lending Explained
What is a payday loan?
When in high financial stress, sometimes we make decisions that may feel like the best thing at the time, but they can sometimes cause greater stress. For example, the car has broken down, you get behind in payments and then an unexpected bill comes in. This is when we can make risky or unwise financial decisions.
When in need of money, an option is to ask a friend for a loan, sell things, or get a short term loan from a pay day loan provider or a buy now-pay later provider. This is where the trouble can start.
Often, payday loans, or buy now-pay later schemes have hidden fees or conditions that can create a worse situation when already faced with financial hardship.
Knowing and understanding pay day loans and other options, allows for good and informed financial decisions to be made.
What do I do if I need a quick loan?
See below for other options that are available instead of a pay day loan.
The No Interest Loans Scheme (NILS) offers safe and affordable access to credit to people on low incomes in NSW.
What you need to know
- The loans are interest free.
- There are no fees.
- Repayments are arranged so you have the capacity to pay without going into further financial hardship.
- NILS cannot be used for cash, bills or debts.
- NILS is not for emergency relief during financial crisis.
- The loan funds are paid to the store or service provider
Essential items
You can borrow up to A$2,000 (two thousand dollars) for essentials items such as:
- whitegoods (such as stoves, fridges, washing machines and dryers)
- essential household furniture
- educational necessities such as computers, laptops and textbooks
- some medical and dental services
- car repairs and registration
- *Phones, tablets and portable electronic devices are capped at $1,000
- other essential items may be considered.
Housing related expenses
You can borrow up to A$3,000 (three thousand dollars) for:
- bond for a new property
- costs associated with a natural disaster.
Am I Eligible?
To be eligible for NILS you’ll need to:
- have a health care card/pension card, or
- have experienced family or domestic violence in the last 10 years, or
- meet the earnings criteria, which is:
- for singles – A$70,000 (seventy thousand dollars) per year, before tax
- for couples or people with dependants – A$100,000 (one hundred thousand dollars) per year, before tax.
- have lived at your current address for a minimum of 3 months.
You’ll also need to show that you’re able to repay the loan in the given time period.
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If you are a Centrelink recipient, you may be eligible for a Centrelink advance. Centrelink offers its recipients an advance on their payments which can be repaid over a series of weeks or months through deductions of Centrelink benefits.
Centrelink Advances vary from benefit to benefit, this includes amount and frequency.
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There are lots of services that can help you. Click here for more information
Things to look out for in loans
If you do decide that a pay day loan is for you, below are some things to consider: