What is a SpeedyMoney Payday Loan?
So what exactly is a Payday Loan? Essentially it's a small loan with repayments that are aligned with the borrower's pay day. The term originated from the UK where payday lending has experienced massive growth over the past decade but now is outstripped by the United States in terms of volume of loans. It's also becoming better known in Australia as it's a convenient way of obtaining credit in a fast, hassle-free process that's totally online. Statistics show that a borrower is more likely to meet their repayments if they are scheduled to come out on their pay day. It also takes the hassle out of having to budget for a repayment or remember when a repayment falls due.
One of the major differences between Payday Loans in Australia and the rest of the world, is the cap on fees introduced by the Australian Government. This is good news for borrowers in that small loans under $2000 and between 16 days and 12 months in duration are capped to a 20% establishment fee and a 4% monthly fee. So there is no APR calculation, it's a simple fee structure that's easy to understand and almost universally charged by all payday lenders. Most of our loans are around 30 days in duration, but Payday Loans can be longer. This means that if you applied for a $400 loan over 30 days then your total repayments equal $496.
We can offer Payday Loans economically because the entire process is online, from your application right through to when your loan is repaid. The application takes as little as 5 minutes and you'll have an answer in less than an hour.
Payday Loans Compared
Fees amongst most Payday Loan providers in Australia vary very little. It is quite standard to find a 20% establishment fee and monthly fee of 4% per month, or part thereof, amongst most payday lenders. This fee structure is what is provided for under the current legislation, the National Consumer Credit Protection Act (NCCP).
However there are substantial differences in the ways that Payday Lenders in Australia charge fees, the time periods they extend credit for, and in the way that they collect their repayments
If for some reason you dishonour a direct debit payment, you will be charged a fee by your payday lender, similar to dishonouring a payment at the bank. At Speedymoney the fee is $35 and this covers the associated bank fees, direct debit fees, and cost of rescheduling. If you successfully make your payment within 48 hours of the dishonour this fee will be waived. However other lenders will charge a daily "in arrears" dishonour fee. Although the lender may see this as an incentive for you to make payment, these fees can rapidly escalate, and so this fee structure should be avoided.
At Speedymoney your Payday Loan is collected in equal instalments on the day your salary hits your account and the direct debits attract a nominal fee. The aim is to keep the repayments manageable and affordable. Other lenders may elect to recoup larger payments upfront, and extend the loan over a longer period once the larger upfront payments are paid. This can result in a higher cost for the customer and should be avoided.
Finding the right Payday Loan from the right Payday Lender
When you have the answers to why you need a payday loan, how much you need, and how long you need it for, you are most of the way there to knowing what type of loan, and therefore which lender is best for you. Some lenders only provide small standardized amounts for short terms, whereas others will lend for longer period thus reducing your repayments.
Your source of income will also have an impact of which payday loan provider is appropriate for you. Centrelink benefits and pensions are considered a specialist segment within the payday loan industry and best dealt with by a specialist credit provider.
Your credit history will also be a factor.
At Speedymoney we look for customers that are employed, with a regular income, that can afford their repayments. We do not take on customers whose majority income is from centrelink and prefer a recent clean credit history. Our loans are from $200 to $1600 extended for 61 days or more, with the majority of loans provided to customers over a one month period.
What will a Speedymoney Payday Loan cost you?
It depends how much you borrow - A Speedymoney payday loan costs 4% per month or part thereof, with an establishment fee of 20% of the amount borrowed. So a $500 loan repaid over a month would cost $620 ($500 x 24%).
Most customers will look at the cost of their payday loan in terms of repayments, compare that against what they expect to be paid in the near term, and decide what is affordable for them. Using the example above, for a customer who is paid weekly, the cost of the loan is four repayments of $155 each.
If this loan was to stretch into the next month there would be another 4% fee to pay, and thus the calculation would be $500 x 28% = $640. Over four repayments this is a cost of $160 per repayment.
Provided all goes according to plan, and this is the case most of the time, there are no additional fees or charges on your payday loan. The important thing to remember is that if you miss a repayment, you can make it up straight away by making a direct deposit or card payment, thereby avoiding any additional costs.
Who uses Payday Loans?
Our Payday Loan customers all have regular incomes and earn more than $500 a week. Most customers are using payday loans to cover temporary cash shortfalls over the course of a month. Often customers tell us that they have been hit with two or three unexpected bills at the same time, there has been a change in their pay cycle for some reason, or it's a particularly busy or expensive time of year, say around Christmas and school holidays. And meeting repayments does not always go according to plan either. Generally we try to avoid levying fees where possible. This can be done by making part payments, or catching up on repayments, thus avoiding extending the term of the loan.
Sometimes we are asked if we do credit checks when assessing a loan application and the answer is yes, but not always. We check the credit file for first time borrowers, but if you are in need of any subsequent loans we do not always find it necessary to make further credit inquiries. The most important information that we collect regarding your application are your bank statements.
We use this information to assess whether you can afford to meet your repayments. We like to know that all our customers can afford to repay their payday loans on time. This helps us manage our business, and helps of customers avoid late payment and dishonour fees.
Repeat Payday Loan customers
Given the difficulties many face sourcing credit from banks and credit unions, it is not uncommon for payday loan customers to be repeat customers. Lenders become more comfortable providing payday loans to repeat customers who have established a track record of repayment. This may lead to larger amounts being lent, over longer periods. However at Speedymoney the emphasis remains on the purpose of the loan and affordability. Just because you may have borrowed before, this does not make you exempt from providing your most recent banking history, bank account and employment details and an affordability analysis.
Other recent payday loans will have an impact on your borrowing capacity, and may pre-empt additional credit checking. it is important not to take on too much debt, no matter what your circumstances are, and investigate other cheaper alternatives, even if they are not as convenient.
At Speedymoney repeat customers are welcome to discuss various different options to structure your future repayment plan ahead of your payday loan application. Please remember that different payment plans need to be agreed upfront.
Payday Loans and your Credit File
Credit files are routinely reviewed during the application process for your first payday loan with Speedymoney. Bankruptcy, judgements, defaults, and credit inquiries are all taken into account in the decision to extend credit to a new customer. At Speedymoney we will not lend to customers who have record of bankruptcy or a magistrates court judgement against them.
Routinely we see customers who have several credit inquiries list on their credit file. These may be from other payday loans, personal loans, or secured loans (eg car loans). This does not count against your application, and demonstrates that you are aware of alternative credit products and understand how they work. However, we do look at how other loans have been used, and how heavily they have been relied on in the past.
A default on your credit file occurs when a debt has not been repaid. The most common defaults that we see are from utility and mobile phone companies. They remain on your file for 5 years, and whilst older defaults may not necessarily be an accurate depiction of your current financial circumstances, and your capacity to repay your current payday loan, recent defaults are and will result in a decline of your payday loan application.
Need a Speedymoney Payday Loan today?
SpeedyMoney is one of the newest providers of payday loans in the Australian market. We offer loans from $200-$1600 over a loan duration of up to 61 days or more.
The application process is so simple and can be completed in around 5 minutes. At SpeedyMoney, we also offer you a client login area where you can view existing loans and repayment dates, apply for new loans, amend your details and see your loan history.
What happens if things go wrong?
To comply with our responsible lending obligations and to ensure you don't suffer any undue hardship, we make certain inquiries about your financial situation before we give you a loan. However sometimes things don't go as planned and the result is a missed repayment. While we do have late payment fees, we are very willing to listen to you and often, especially if you've made contact, substantially reduce and even waive fees. If you do find yourself in this situation, please don't hesitate to contact us on 1300 271 902 or at email@example.com.
The information that you need to provide to Speedymoney
As discussed above, Speedymoney will verify your identity, in some cases check your credit file, and require the most recent 90 days of transaction history from the bank account into which your income is paid. You do not have to send us paper copies of your bank statements – the easiest way to supply this information is to automatically download it via our online application. It's secure, takes less than a minute, and will require your online banking user name and password.
If you have more than one bank account where you are paid income, you must provide 90 days of statements for each account. This information helps us assess the affordability of the repayments for the loan.
Other information may be required depending on your credit history, if there are or have been any other loan repayments, or your income has been irregular.
What if I am on Centrelink benefits?
If the majority of your income comes from Centrelink, we will not accept you for a loan. There are specific rules for customers in this category limiting the amount of repayments to 20% of your income, and there are specialist credit providers that service this demand.
What can I use a Speedymoney Payday Loan for?
You can use a Speedymoney Payday Loan for just about anything. Whether it be just a temporary cash shortfall or: