Small Online Loans Australia
Looking for the right small loans Australia? The financing market offers a plethora of options to the interested borrower. However, considering how not lenders out there are created equal, it makes sense to take the time to compare and contrast your options whether you’re planning on taking out a payday loan as small as $2000 or something more substantial as $35000. Being aware of the charges, loan fees, financing stipulations and after-sales assistance is crucial for making an educated decision.
Understanding small loans
Small loans Australia are personal loans with no security involving amounts no higher than $5000. Also referred to as a “short term instant loan” or “cash loan”, they are very much the same as unsecured personal loans. Due to how they only involve a much smaller amount, however, they have since been considered a different type of personal loan. Many people have also learned to use small loans as an alternative to credit cards thanks to the following benefits:
- Fixed interest rates and repayments so, everything is upfront
- Interest rates are generally similar
- More flexible in terms of financing guidelines. Credit cards are issued only by major banks. Non-bank lenders tend to take more risks hence, getting approved for a small loan is significantly easier.
- Credit cards offer a revolving credit line which makes them very tempting to get used for unnecessary purchases.
Uses of small loans Australia
People taking advantage of small loans will be delighted to know that they are very flexible in terms of how they can be used. Among these are:
- Debt consolidation
- Cheap car
- Emergency expenses
The list does not end there. The loan can be used for a wide array of purposes compared to other more traditional loans where you have to use the funds for the specific purpose the loan was taken out. Once approved, the lender will just get your funds credited directly to your enrolled bank account. How you will want to use the funds then will be purely at your discretion.
Finding the right lender
There is a thriving financing industry in Australia. Small loan providers are no exception. Last year alone, about a million Australians took advantage of small online loans. The high demand for the service has paved the way for more lenders to pop up over the years. This makes it more important to select the right one.
The Consumer Credit Legislation Amendment Act 2012 stipulates stringent regulations for lenders offering small loans to ensure customer protection. The stipulations are:
- Lenders offering loans of up to $2000 are capped and are only allowed to charge a fixed rate as set by the regulators. The maximum monthly fee is at 4% of the principal and the allowed maximum establishment fee is at 20%.
- A ban has been placed on loans of no more than $2000 that had a 15-day term.
- If you default on your debt, penalties and charges should not be more than the principal amount.
- Responsible financing must be strictly observed. This means that lenders are forbidden to offer another loan when you’re already falling behind your repayments on a current one.
Some people often think that due to the regulations that the above-mentioned legislation stipulates, it shouldn’t matter which loan provider you end up with. Unfortunately, as with everything else, not all small loan providers out there are created equal. Price and policy can significantly change from one lender to the next.
There are specialist lenders that are focused only on offering small loans to bad credit, high-risk borrowers. Due to the type of borrowers they cater, they will generally charge the maximum allowed rates to offset the risks. Despite the expensive fees though, many customers will still consider their financing service as they are more concerned about getting approved for a bad credit loan. These types of lenders will generally base their approval on a customer’s current capacity to pay off the debt.
For customers with good credit ratings, it is important to pay close attention to the loan fees and charges they are being offered. Customers with good credit scores will be viewed by lenders to be less likely to default on the loan. This is why it makes sense that they should be offered cheaper, more competitive rates.
Different customers have different circumstances which is why a majority of lenders work by assessing a customer’s risk. When a lender will consider you to be a low-risk borrower, they will likely extend cheaper and more competitive rates to you. Higher-risk borrowers, on the other hand, might find it more challenging to get approved. In the event that they do get granted an instant cash loan offer, the rates involved will be significantly higher.
Some lenders offer a tiered setup when assessing customer risk. This could start at an establishment fee of 10% and a monthly fee of 1% with numbers going up to the maximum allowable for high-risk borrowers.
Choose a reputable company, one that has been around for quite some time and is all about building good customer relationships. It doesn’t hurt to find out what past customers have to say about them. Read about their online reviews too so you will know exactly what to expect.
Learn more about the loan you are getting and what it comes with. Find out if extra repayments come with certain fees or if it is possible to settle the debt before its term without additional costs.
At SamedayLend, we work hand in hand with some of the most reputable small loans providers in Australia. Our lender partners are more than happy to extend financing to customers of varying profiles. Some are more than happy to offer the most competitive rates to borrowers with strong credit standing and there are those who are willing to look beyond your credit standing and focus on your capacity to keep up with the repayments instead. Our lender partners are not only reputable but have also been in the industry for many years. When looking for some of the best offers for small loans Australia, you’ve come to the right place.