How to Get Lowest-Interest Payday Loans

Good financial planning means fitting expenses into your income so you have enough money left over for other things. However, despite good budgeting, unforeseen situations can happen that make you want your payday to come early.

If you need money urgently before the pay date, you can opt for a payday loan. These are small amounts that you’ll repay as soon as your paycheck arrives or during several subsequent pay cycles. Read on to learn how to get the lowest interest payday loans.

What this article covers:

How to Decide Which Lowest-Interest Loans Are the Best

When looking for a low-interest rate payday loan, you must know how much money you actually need. With payday loans, you can borrow as low as 200 dollars or a maximum of $5,000, but that’s not the maximum all lenders offer.

lowest interest payday loans

On top of knowing the amount you need, you have to research the offer and check things like overall loan costs, eligibility criteria, and any other specific requirements lenders might have. 

Also, you must check the lending service quality and speed. Lenders usually provide a response to your application within 24 hours. In the best case, that can even happen in less than an hour. Some institutions even offer payday loans deposited on weekends, which come in handy when you lack cash out of work days.

Costs of Payday Loans

Payday express loans can be handy, but for people with troublesome finances, they can be a debt trap. So the Australian government decided to bring laws to prevent dishonest lenders from taking advantage of naive borrowers.

So for payday loans less than $2,000, there’s no interest. Payday direct lenders may charge fees for establishing the loan, as well as monthly fees. Establishment costs are generally fixed and amount to 20% of the loan principal. Monthly fees can go up to 4% of the borrowed amount.

lower interest payday loans

In the example of a payday loan of $1,000 with a repayment period of three months, we see that the total costs will be:

$1,000 + $200 (establishment fee) + $120 (monthly fees for three months) = $1,320

The monthly instalment for this payday loan will be $440.

For larger loans, lenders can charge an interest rate. It’ll depend on several factors, but the APR for these short-term payday loans (they can be called personal loans if you ask for amounts of up to $5,000) can’t be higher than 48% per annum.

Repayment Terms

The repayment period for these quick-cash payday loans is from 16 days to one or two years, depending on the lender. This tenure period can affect the overall loan cost. Small payday loans come with no interest, but they include monthly fees. And the longer the repayment period, the more fees you’ll pay.

The same goes for payday loans higher than $2,000. These financial arrangements include interest paid with every instalment. If you opt for a longer tenure, your instalments might be lower, but you’ll pay more interest.

payday loans with the lowest interest

Eligibility Requirements

Eligibility requirements for payday loans aren’t strict, and most direct lenders adhere to these criteria:

  • You have to be an adult (over 18).
  • You must prove regular income, whether from employment, self-employment, or Centrelink benefits.
  • If you receive Centrelink benefits, they shouldn’t be more than 50% of your income.
  • You need a stable cash flow in your bank account for the last three months.
  • It’d help if you didn’t apply for another payday loan at the same time and if you have no recent loan defaults or bankruptcies.

How Lower-Interest Payday Loans Work

For starters, you have to find reputable lenders in Australia who offer this financing method. Keep in mind that banks usually don’t work with these payday loans. Instead, these are usually non-traditional direct lenders who willingly take the risk these unsecured payday loans carry.

Once you select the lender, you should check whether you meet their qualification requirements. They can have specific criteria regarding how much you can borrow, depending on your income. For example, they can approve a $500 payday loan only if Centrelink is not your primary income source.

Then, it’s time to fill out the formal loan application and submit your documents. With most lending providers, you can apply for and get a loan 24/7. Since the application procedure for These loans is entirely online, you don’t have to fax your papers anymore, which speeds up response time.

No lender will give you loans without a credit check. But it’s a soft inquiry, so it won’t affect your credit score. Once they run through your application, they send you their answer. If the loan is approved and you agree with the lending terms, you’ll get the money almost instantly.

payday loans with lower interest rates

Applying for Payday Loans with Bad Credit

Don’t refrain from payday loans if your credit score is low. You can find direct lenders for bad credit borrowers and borrow money even though you’re not a perfect applicant. 

Payday loans have the least stringent eligibility requirements, and the approval is almost guaranteed. In the case of bad credit, direct lenders don’t pay much attention to your credit score because they care more about your current finances. 

In simple words, they prefer to know your ability to afford and repay this loan. Even if you receive Centrelink benefits, you can be approved for payday loans. But even then, you shouldn’t expect the lowest interest if your credit score is below average.

Frequently Asked Questions

Which Payday Loans in Australia Are Easiest to Get?

There are many lending options, but the ease of applying for and getting payday loans in Australia will depend mostly on your finances and credit score. Right now, OrangeLoans provides favourable arrangements for different borrowers, from those with stellar credit scores to applicants with below-average ratings on Centrelink benefits.

What If I Fail to Repay the  Loan?

Despite the small risk of loan default, it can happen that you don’t have enough money to pay off the loan on time. So, this payment will be delayed until you have enough money in your account. But a lender will add a late fee to this amount, which can significantly increase the loan cost. 

payday loans at the lowest interest rate

How Can a Default on Payday Loans Affect My Credit Score?

Failing to repay this short-term loan will leave a negative mark on your credit history. If you think you can fall behind on repaying loans, talk to direct lenders about your options. They might suggest different payment plans to help you organize your finances and avoid late fees.

Are There Any Alternatives to Payday Loans?

Even if you plan to borrow only $500, it can cost you an arm and a leg if you don’t choose the lowest interest loans. If you want to avoid high costs, you can opt for alternatives to payday loans that come with lower interest rates, like personal loans, cash advances, pay-on-demand loans, or even credit cards.

Wrap Up

Borrowing money is a handy option when you need extra cash to bridge the period until payday and lowest-interest payday loans enable you to do so. Although they’re generally not considered favourable, you can try to negotiate better lending terms with lenders. 

They’re more than willing to meet your needs if you have good finances and not many mishaps in your credit history.

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