When most people start looking for the best payday loans in Australia, chances are that the first thing they search for is a lender who will get them the money they need in the quickest possible manner. Payday loans, however, are notorious for having extremely high interest rates which can make it close to impossible to pay off the loan in a short amount of time. Taking the time to research the best payday lenders can save you major money.
A payday loan is a short term loan with a negotiated term anywhere between two weeks and one year. Payday lenders tend to have a maximum loan amount of $2,000, though some lenders may be willing to offer slightly higher amounts. In general, payday loans are usually high cost, with higher interest rates.
The small loans market, of which payday loans are a part of, does around $400 million dollars of business each year. In recent years, however, Australian legislation has attempted to regulate this sector of the economy. As it stands, payday loans have a maximum fee cap of 24% per $100 borrowed . This maximum interest rate is made up of a 20% establishment fee and a 4% monthly fee.
While most payday loans are always going to be more expensive than other longer-term loans on the market, there are a few strategies to help you find a payday loan today with a much lower interest rate.
Firstly, it is important to limit the term on the short term loan that you choose. Payday loans are generally needed only in special circumstances, and the quicker you can pay them off, the less interest you are going to have to pay. If you find yourself in a situation where you are having to take out a payday loan on a regular basis, or are negotiating a longer term payday loan, it is usually best to find other personal loans that offer more beneficial terms and interest rates over a longer loan term.
Secondly, before taking out a payday loan, it is always a good idea to shop around for different lenders. There are several websites to help you compare payday lenders , and this can save you considerable amount of cash. Even a slightly lower interest rate can add up to major savings, and lenders also tend to have hidden fees that can also increase the overall cost of the loan.
Lastly, before taking out a payday loan, you might want to check for other alternatives. For example, if you are considering taking out a payday loan to pay an overdue utility bill, it might be a good idea to directly contact the utility company. In some cases, you might be able to apply for emergency utility bill vouchers or negotiate a payback plan that has much better rates that what payday loans can offer.
With a little bit of research, the right payday loan can help you overcome a temporary financial setback.