Guaranteed Payday Loans No Matter What in Australia: Fact or Fiction?

In Australia, licensed money lenders, such as cash advance stores or online lenders, offer payday loans.

To apply for a payday loan in Australia, you don’t need to go through too much hassle, but there’s always buzz about guaranteed payday loans no matter what. 

Sounds too good to be true, right? 

Continue reading as we tell you all about these loans and help you make the best decision.

What this article covers:

What Is a Guaranteed Payday Loan?

A guaranteed payday loan, like any other payday loan, is a short-term loan intended to cover sudden expenses or to bridge the gap between paychecks.

These loans are almost always given out for small amounts of money, and they’re due on the borrower’s next payday, just enough to cross that 30-day bridge.

What makes them almost guaranteed is that most lenders won’t be too nitpicky about the information you have to provide.

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Do Guaranteed Payday Loans Actually Exist in Australia?

The short answer is no. Sorry to break it to you, but payday loans aren’t guaranteed in Australia.

Law requires lenders to conduct a credit check and assess a borrower’s ability to repay the loan before issuing the loan. This means that even if you meet all of the eligibility requirements, there’s still a chance that your loan application may be denied.

That being said, lenders will also have their own criteria and policies, so it’s best to check with each lender specifically.

Why Do Lenders Offer Guaranteed Payday Loans in Australia?

Some lenders may make false claims about providing guaranteed payday loans in Australia. This is likely to be illegal and could be considered a form of fraudulent behaviour. There are various reasons why a lender might make such false claims.

One reason is that they may be trying to entice borrowers with a “guaranteed” loan to convince them to apply for a loan with the lender. This can especially appeal to borrowers who may have difficulty obtaining loans from other sources, such as traditional banks.

Another reason is that lenders may try to deceive borrowers about their qualifications for a loan. For example, they may falsely claim that the loan is guaranteed even if the borrower has poor credit. This can lead to borrowers applying for loans that they’re not qualified for and then being charged high fees and interest rates when they’re unable to repay the loan.

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What Can I Do If I Was a Victim of Fraudulent Guaranteed Payday Loans in Australia?

Your case should be investigated. If you feel you’ve fallen prey to fraudulent cash lending schemes, you should report it immediately.

You can report such lenders to the Australian Securities and Investments Commission (ASIC), which is responsible for enforcing consumer protection laws in financial services and products.

What to Keep in Mind to Secure a Guaranteed Payday Loan

Although payday loans aren’t guaranteed, there are some things to keep in mind so you can almost be 100% sure you’ll get a loan:

Some Lenders Will Do Credit Checks

When you apply for almost any loan, the lender will check your credit report to see your credit history. This often applies even for payday loans, but it depends from lender to lender.

This report will show your previous loan and credit card payments, any defaults or bankruptcies, and court judgments.

The lender will use this information to assess the risk of lending to you and to determine what interest rate to offer you.

So, make sure your credit report looks trustworthy.

Lenders Will Assess Your Ability to Repay the Loan

This assessment is important, ensuring that the borrower can afford the loan. Lenders will look at your income, expenses, and other financial commitments to determine if you can afford the loan repayments.

They may also ask for payslips, tax returns, or other financial documents to verify your income. 

If your financial commitments show that you won’t be able to repay the loan, lenders probably won’t give you one.

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What Are the Risks of Payday Loans?

One of the most serious risks of payday loans is that the high interest rates and short repayment terms can make it difficult to repay them on time.

And if you can’t repay the short-term payday loan on your next payday, you may be hit with additional fees and interest charges, which can quickly spiral out of control.

Alternatively, if you don’t repay the loan on time, the lender may take legal action against you, which can lead to wage garnishments, bank account levies, and additional penalties.

What Are the Alternatives to Payday Loans?

If you’re facing a short-term financial crisis, there are a few alternatives to payday loans that you may want to consider:

Credit Cards

If you have a credit card with a low balance or a 0% introductory rate, you may be able to use it to cover your expenses until your next paycheck.

Personal Loans

Personal loans tend to have lower interest rates and longer repayment terms than payday loans, making them a more affordable option for many borrowers.

Government Benefits

If you’re struggling financially, you may be eligible for government benefits, such as unemployment benefits or financial assistance programs.

Budgeting

It’s as simple as that. Make a budget, stick to it, and look for ways to reduce your expenses.

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How Can I Guarantee a Safe Payday Loan?

You should know a few things before getting a payday loan to ensure it’s a safe option for you and that there are no surprises.

Ask for All the Information Before Signing the Contract

Lenders must provide borrowers with a loan contract that sets out the terms and conditions of the loan, including the interest rate and fees.

This contract must also include a repayment schedule and a statement of the borrower’s rights and responsibilities.

You have to make sure you’re fully informed about the terms and conditions before you take out the loan.

Borrow What You Can Repay

Beware of responsible lending. The government has regulations to ensure lenders don’t lend to people who can’t afford the loan, but this still doesn’t keep you 100% safe.

If you don’t meet the criteria, but the lender is persuading you to get the loan, consider finding an alternative option because this might be a debt trap red flag.

Fix Errors on Your Credit Report

Before applying for a payday loan, you should check your credit report for errors. If you find any mistakes, be sure to contact the credit bureau and have them corrected. This will help to improve your credit score and make you a more attractive borrower.

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Keep Your Debt-To-Income Ratio Low

Your debt-to-income ratio (DTI) is the amount of debt you have compared to your income. Lenders prefer borrowers with a low DTI because it means that they’re more likely to be able to repay the loan. You can lower your DTI by paying down other debts before applying for the loan.

Be Honest and Upfront

Reputable lenders appreciate honesty and transparency and are likelier to approve a loan application if they can trust the borrower. Be sure to provide accurate and complete information on your loan application. Let the lender know if you have any special circumstances that might affect your ability to repay the loan.

Compare Lenders

Not all payday loan lenders are created equal, so it’s a good idea to shop around and compare the fees and interest rates offered by different lenders. Be sure to read the fine print and understand the terms and conditions of each loan before you decide which one to apply for.

Should You Get a Payday Loan if You’re Unemployed?

Although the idea of quick cash payday loans may seem like a logical step forward, in Australia, most payday lenders require you to have a steady income to qualify for a loan.

This could be from a job, government benefits, or other regular income sources. So, applying for a payday loan might be difficult and dangerous if you’re unemployed and have no other income.

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Wrapping Up

It’s important to be aware that there are no guaranteed payday loans, as all loans involve some level of risk for the lender.

Additionally, as a rule of thumb, always be wary of any lender that promises a loan that seems too good to be true or asks for money upfront as a “fee” or “insurance” before they disburse the loan. It’s always a good idea to do thorough research on a lender and read the terms and conditions of any loan carefully before applying.

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