Why Are Payday Loans So Expensive?
The main concern people have when applying for a payday loan is the cost, interest raise, application fees and how much they will have to payback. Most payday lenders in Australia have attempted to be transparent with their fee structures and outlining the cost that you will be charged when you decide to take out this loan.
In Australia, payday lenders are restricted as to what they can charge. All the fees are set by ASIC. This loan is one of the most heavily legislated forms of credit in the country and has come under various reviews and has been subjected to many reforms. It was in 2013 when the National Credit Act was amended and the interest rate of this loan was restructured as fees and lenders were directed not to charge more than 20% establishment fee and 4% monthly fee of the total loan amount.
While all payday lenders in Australia operate with similar cost, they still may differ on their fees and may charge less than the ASIC cap. Before you apply for this loan you should compare the turnaround time, easy of repeat borrowing and the late fee and default cost charged by the lenders. You can find online calculator that will allow you to see how much you are going to pay when you apply for this loan depending on the amount you borrow. This calculator is designed to provide you with an estimate based on the amount you enter.
As long as you stick to the repayment schedule, a Payday Loans can be one of the most ideal solutions to tackle temporary cash shortfalls. However, if you fail to repay, lenders may charge a variety of fees. Therefore, if you think you will have trouble making repayments, it is best to avoid this loan, as you might end up paying much more than what you may have actually borrowed.
​