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Last Updated: August 2025
Need cash before your next pay hits your account? You might be looking at payday loans. They’re quick, yes, but they pack a hefty price tag. Let’s break down what these loans look like in Australia, the risks, costs from popular lenders, and what other options (like PressPay) might save you some serious cash. Think of this as a chat over coffee – straight talk about your money.
Payday loans (or small amount loans as they’re officially known in Australia) are short-term loans up to $2,000 that you pay back quickly. Most give you between 16 days and a year to repay, but the idea is usually to clear the debt on your next payday – hence the name. People typically grab these when hit with unexpected costs – think car repairs when you’re a week from payday, or a bill that can’t wait.
These loans offer quick cash access when your bank account’s running on empty. Most payday lenders look at your current income rather than digging through your credit history. Apply online or in-store, and you might have an answer within hours. Feels like a quick fix when you’re stuck.
But that convenience can come with a hefty price tag. Payday loans can carry sky-high fees, making them often one of the priciest ways to borrow money. In Australia, they fall under “Small Amount Credit Contracts (SACCs)” with caps on both loan size (max $2,000) and term (up to 12 months). Still, borrowing just a few hundred dollars can leave you paying back much more than you expected.
The usual features of Australian payday loans:
Put simply, a payday loan is a quick but expensive cash fix. It might seem like your only option when you’re broke and payday’s still a week away – but make sure you understand what you’re signing up for.
Let’s talk actual dollars. How much do payday loans cost in Australia right now? Here’s what a few big payday lenders charge as of early 2025:
Fundo: Fundo is a licensed online lender offering both small and medium personal loans. For small loans ($500–$2,000), they follow the regulated fee structure: 20% establishment fee plus a flat 4% monthly fee on the principal. No extra interest rate for loans in this range.
Example: borrow $1,000 from Fundo for 5 months, and you’ll pay a $200 upfront fee plus about $40 per month. Total? Roughly $1,400 to repay $1,000. Pay earlier and you’ll save on monthly fees – Fundo (like most lenders) allows early payoff without penalties.
Fundo’s medium loans ($2,001–$5,000) work differently – they charge a $400 establishment fee and interest around 47.8% p.a. on larger amounts. But focusing on the smaller “payday” style loans: Fundo’s pricing sits at the legal maximum. A $500 loan for 3 months costs $100 + (3×$20) in fees = $160 in fees, while $2,000 for 12 months costs $400 + (12×$80) = $1,360 in fees.
While Fundo’s fees are high, they’re at least transparent and capped by law.
Cash Converters: Cash Converters is a familiar name – known for pawn shops across Australia – and they also offer cash loans both in-store and online. Their Cash Advance (in-store short loans) and Small Personal Loans (up to $2,000 online or in-store) use the same capped fee structure: 20% establishment fee + 4% of the loan amount per month – identical to Fundo’s model, since these caps are set by law.
Cash Converters gives a clear example: Borrow $1,000 over 9 months and pay $560 in fees (a $200 upfront fee + $360 in monthly fees), meaning you repay $1,560 total. Borrow just $100 for a month, and you’ll pay $24 in fees (making the repayment $124) – the percentage stays the same.
Worth noting: Cash Converters’ minimum loan term is 2 months for online loans, and they won’t charge monthly fees beyond the period you have the loan (if you pay off early, they drop the remaining months’ fees, per the new rules). Compared to newer fintech lenders, Cash Converters might be slightly slower with applications (you can apply online, but many customers still go in-store). Cost-wise, they match the industry’s legal limits – expensive, but not more than other compliant lenders.
In summary, Australian payday loan costs follow that 20% + 4%/month formula – whether you go to a digital lender like Fundo or a shopfront like Cash Converters. Some operators like Cigno find ways to charge even more through extra fees, pushing costs well above the standard cap.
Always check the lender’s cost disclosure and look for examples on their website. By law, they must show a comparison rate or example. If you see “$1000 loan costs $560 in fees over 9 months”, you can scale it to work out your situation. Remember these fees are flat, not reducing with your balance – even with just a bit left to pay, that monthly fee still applies. That’s why these loans hurt so much if you keep them long-term.
While payday loans might seem like a lifesaver when you’re short on cash, they come with serious dangers:
The cost is through the roof: Payday loans are among the most expensive borrowing options out there. Yes, Australian law caps the fees (20% establishment + 4% monthly), but even with these “limits” you’ll pay a fortune. Borrow $2,000 for a year and you’ll repay around $3,360 – that’s $1,360 in fees on top of what you borrowed. Think of it like paying 68% interest (for illustrative purposes). For perspective, normal bank loans might charge 8-15% annually – way cheaper than payday lending.
The debt trap is real: These loans cost so much that many people struggle to pay on time. If you can’t pay when due, the lender might suggest rolling over or taking a new loan to cover the old one. This is how the spiral starts – borrowing again to repay the last loan, and on it goes.
Your financial stability takes a hit. Each payday, a chunk of your income vanishes on loan fees, leaving you short for basics, which pushes you to borrow again. It’s a nasty cycle that many borrowers fall into. Financial counsellors often warn that payday loans can make your money troubles worse, not better.
Direct debits hit hard: When you take a payday loan, you usually agree that the lender can direct debit your bank account on payday. So as soon as your salary lands, the lender automatically grabs the loan repayment.
The problem? You might be left with little for rent, food or bills, because the loan jumps the queue. If the debit fails because you don’t have enough money, you may cop a hefty dishonour fee from the lender (and possibly from your bank too). One lender we found charges a $79 dishonour fee for a missed payment. So not only are you broke, but now you’ve got an extra fee and still owe the loan.
Your credit score takes a hit: Payday loans can affect your credit record in several ways. Most lenders do credit checks when you apply – each inquiry dings your credit score a bit. Multiple payday loan applications on your file signal financial stress to other lenders.
Worse still, if you miss payments or default, it’ll likely be reported and damage your credit rating. A default mark can stick to your credit report for years, hurting your chances of getting other loans (like a car loan or mortgage) down the track.
Even if you pay everything on time, some banks view payday loans as a red flag when assessing you for a bigger loan – it suggests you’ve had to resort to expensive debt, which might mean you’re not great with money (at least in their eyes). Misusing payday loans or not repaying them on-time can mess up your credit and future borrowing power.
Limited protection: Australian authorities have put some protections in place – but they have limits. By law, lenders must be licensed and follow responsible lending laws (they should check you can afford the loan). Fees are capped, and if you fail to repay, the maximum they can charge in default fees usually equals your loan amount (your debt can double, but no more).
Recent changes have tightened rules: since 2023, payday lenders can’t take more than 10% of your net income in repayments (to stop overburdening you), and they’ve banned some nasty practices like unsolicited offers or charging full monthly fees if you repay early. These laws help, but they don’t fix the core problems. Many lenders still push right up to the fee limits, and it’s on you to avoid borrowing more than you can handle.
If things go wrong, you can complain to the Australian Financial Complaints Authority (AFCA) or get free help from a financial counsellor – but ideally, you don’t want to end up in that situation.
Bottom line: Payday loans are risky. The massive costs can turn a short-term loan into a long-term problem. Always read the fine print and think hard about whether the cash now is worth the trouble later. Often, there are better options (which we’ll cover below).
Given the eye-watering costs and risks of payday loans, it’s worth checking out alternatives before signing up. Australians have several options for short-term cash that won’t destroy your finances. These include no-interest loans (NILS) for eligible people, Centrelink advances if you’re on benefits, borrowing from family or friends, or talking to your bill providers about payment plans.
One newer option that is also gaining traction is salary advance services, and that’s where PressPay comes in.
PressPay offers a safer, more affordable alternative to payday loans. It’s a pay-on-demand service – letting you access part of your earned wages before payday, on your terms. Rather than lending you money with interest, PressPay gives you an advance on money you’ve already earned. Here’s how their pricing works:
Fixed 5% fee, no interest: PressPay charges a flat 5% fee on the amount you withdraw from your salary, with no ongoing interest. This is a one-time fee per advance. Need an early $200 from your upcoming pay? The fee would be $10 (5%). You’d repay $210 total when your paycheck arrives. That’s it – no hidden fees. Whether you repay in a week or a month, that fee doesn’t grow, since it’s not interest – just a fixed percentage.
Compared to typical payday loan fees, 5% is tiny. Many payday lenders would charge 20% + monthly fees – which could be ~$60 or more on a $200 loan if you kept it for a month. PressPay would cost $10 on that $200 advance, regardless of timeframe. PressPay proudly states there are “no interest charges ever” on its advances.
Access up to $1,000 of your pay: With PressPay, you can typically withdraw up to a certain limit of your already earned wages (often up to $1,000) before payday. This isn’t new debt – it’s your own pay delivered early. PressPay just charges that 5% facilitation fee. The amount available might depend on your salary and how much you’ve accrued in your pay cycle. It’s like getting paid earlier for work you’ve done.
Seamless repayment: When your next payday arrives, the amount you took early (plus the 5% fee) is automatically deducted – typically directly from your pay or via direct debit on your account. No need to worry about remembering to pay it back or dealing with debt collectors. There’s no option to roll it over and no spiraling interest – it’s sorted. You get cash when needed, and later your paycheck is slightly smaller (because you already got part of it). This enforces discipline: you can’t extend the debt beyond the next payday, preventing long-term debt buildup.
No credit checks or lengthy forms: Using PressPay doesn’t involve the credit checks or paperwork a loan would. Since it’s tied to your employment/income, as long as that’s verified, there’s no traditional loan approval process. PressPay lets you register in about 5 minutes with just your mobile number and some details, no separate app needed. To withdraw, simply send a text or use their online chat (they even have an AI assistant named Ella to help) and the cash can hit your bank instantly. This makes it super convenient – possibly even more so than a payday loan – because once set up, getting an advance is quick without filling in new forms each time.
Clear and capped costs: With PressPay, you always see the fee upfront (shown before you confirm a withdrawal). For instance, “Withdraw $500 now, repay $525 on payday” would be clearly stated. No interest accruing behind the scenes. If for some reason you can’t repay (maybe you left your job or your pay didn’t arrive as expected), PressPay’s terms would apply – but unlike payday lenders, they don’t add new fees every week or month. They also offer some transactions at 0% fee in certain cases (like using the advance as a store gift card, which can be fee-free or lower fee). The key point: PressPay’s model naturally limits the cost to that 5%.
To make the comparison crystal clear, let’s compare a standard payday loan vs. PressPay:
| Factor | Typical Payday Loan | PressPay Advance |
|---|---|---|
| Amount Available | Up to $2,000 (legal cap for small loans) | Up to $1,000 of your earned wages per pay cycle |
| Repayment Timing | 16 days to 12 months. Often tied to next payday, but extensions possible (some loans run several months) | Automatically repaid in full on your next payday (next salary deposit) – no long-term debt |
| Costs | ~20% upfront fee + 4% monthly fee on the amount borrowed (very high cost). Example: Borrow $500, repay ~$620 in a month (around $120 in fees). If you kept $500 for 3 months, fees would be ~$180. | Flat 5% fee, no interest. Example: Access $500 from your pay, fee is $25, you repay $525 on payday. No matter if your pay is weekly or monthly, the fee is just 5%. |
| Application & Eligibility | Requires a loan application (online or in-store). Lender may check your credit and must assess your finances (bank statements, expenses) for approval. Approval criteria vary; some lenders accept bad credit, but you generally need to show income. | Simple signup linking your employment/pay. No credit check or complex application each time – once set up, just request an advance via text or online and receive funds instantly. Based on your accrued wage, so if you're earning, you're eligible. |
| Impact & Risks | If you miss payments, fees pile up and your credit score suffers. Easy to fall into re-borrowing and paying lots in interest. Can strain your budget for months. | Since the amount comes from your next pay, you're using your own money early. No ongoing debt means less chance of a debt spiral. Costs are capped (5%), and it doesn't directly affect your credit score. You need to budget for the reduced paycheck, but the structure helps prevent prolonged debt. |
The payday loan is far more expensive and risky if not managed perfectly. PressPay charges a minimal fee for advancing your own earnings and helps you avoid long-term debt.
Beyond PressPay, consider these alternatives too:
No Interest Loan Scheme (NILS): If you’re on a lower income, you might qualify for NILS through community organisations – borrow up to ~$2,000 for essential items or ~$3,000 for specific larger costs (or potentially disaster recovery) with no interest or fees. You just repay what you borrowed, usually over 12-24 months. You can check via Good Shepherd or other community organisations if you need to fund something important like a fridge or car repairs and fit into the appropriate criteria.
Centrelink Advance: If you receive Centrelink benefits, you may be eligible to get an advance payment rarely (once a year or so), which you repay out of future payments interest-free.
Hardship plans: Sometimes the “cash crisis” can be eased by talking to whoever you owe money to. If it’s an electricity bill that’s due, utility companies often have hardship programs or payment plans to spread out the bill and remove the need for a loan. Same goes for phone bills, rent (talk to your landlord), etc.
Credit union or bank small loan: Some institutions offer small loans or overdrafts at much lower cost than payday lenders. These can be harder to qualify for (they’ll check credit and income carefully), but if you can get one, you’ll save on interest.
Friends/Family: Not everyone has this option, but if you do, borrowing $200 from a mate and paying them back next week (maybe with a case of beer as thanks) will be much cheaper than any payday loan! Just make sure to honour the trust and pay back as promised.
Exhaust these alternatives before taking on a high-cost payday loan. Even a cash advance on a credit card might be cheaper (those can be ~20% p.a. interest – still high, but way less than a payday loan’s effective rate).
To give you a clearer picture, here are a few payday loan providers in Australia and what they’re about. (This isn’t an endorsement of any – just an overview.)
Fundo: Fundo is a 100% online payday and personal loan provider – a newer fintech player in the lending market. They offer loans from $500 up to $5,000, with the smaller loans (up to $2k) falling under the payday loan category and larger ones being more like traditional personal loans.
Fundo’s interest and fee structure for small loans is straightforward (as discussed, 20% + 4%/month). Fundo’s fee disclosure states that their larger loans have an interest rate around 31.2% annually. Fundo markets heavily to people needing “fast cash” and boasts a high approval rate, even for those with less-than-perfect credit, as long as you can afford the loan. Fundo is essentially one of the mainstream online payday lenders in Australia, operating within regulatory limits.
Cash Converters: Cash Converters is a household name that most Australians recognise. Founded in 1984 as a pawnbroking and second-hand goods franchise, it has hundreds of stores nationwide. Alongside buying and selling goods, Cash Converters has a substantial personal finance arm.
They offer Small Amount Credit Contracts (up to $2,000) and Medium Amount Credit Contracts (up to $5,000) under the National Credit Act. In plain English, they do payday-style loans (called Cash Advance or Small Personal Loan) and larger short-term loans. You can walk into a Cash Converters store and walk out with a few hundred in cash (that’s the Cash Advance, usually a 4-week term loan) or apply online for a longer-term small loan.
Being a big company, they tend to be more by-the-book: you’ll fill out forms and they’ll check your bank statements thoroughly. But they’re convenient for many due to their widespread presence. Cost-wise, as we saw, they charge the maximum allowed fees on small loans. Over the years, Cash Converters has had to pay refunds and settlements for past misconduct (charging excessive fees to some customers), but they continue to be a major player and have updated practices to comply with current laws.
Those are just three examples. Other notable payday lenders in Australia include Nimble, Money3, Wallet Wizard, Sunshine Loans, MoneyMe, and many others – each with their own tweaks on fees or marketing, but generally following the same fee-cap rules. Always compare and be careful; sometimes a slick website might hide the true cost, which legally must be disclosed somewhere (often in the FAQ or footer).
Payday loans might solve your cash crunch today, but they can make life harder tomorrow. Before signing up, take a moment to look at your overall financial picture. Here are some final thoughts:
Question whether you really need it: Ask yourself, “Do I truly need this loan? Is it for an absolute necessity?” If it’s for something non-essential, wait or find another solution. If it is essential, can you find a way to manage without paying 400%+ annualised fees? Sometimes creativity or tough conversations (with a landlord, with a utility provider) can save you from debt.
Check all your options: As we’ve seen, alternatives like PressPay, no-interest community loans, Centrelink advances, or even a chat with a financial counsellor can make a huge difference. PressPay letting you access your own pay for a 5% fee is miles better than paying 20% + 4% a month to a lender. The Australian government’s MoneySmart site says it straight: “There are cheaper ways to borrow money when you need it” – making payday loans a last resort. Use tools like the MoneySmart payday loan calculator to understand the total cost before signing anything.
Keep the loan as small as possible: If you do take a payday loan, borrow only what you absolutely need. It’s tempting to take the maximum you’re offered (“hey, I got approved for $1,000, might as well take it just in case”). Don’t. Only borrow the exact amount you need, because the fees and repayment will drain your next paycheck. Try to pay it off as fast as you can – if you can tighten your belt and clear it in 2 months instead of 3, do it; you’ll save on those extra monthly fees.
Plan for repayment: Mark the due date on your calendar. Since the lender will likely direct debit your account, make sure you have enough money there on that day. Remember that, say, $300 might disappear from your pay for the loan, so adjust your budget for that pay period.
If you realise you can’t afford the upcoming payment, contact the lender immediately. By law, lenders must work with you if you’re in hardship – they might allow an extension or a payment plan. Yes, you might pay some extra fees, but it’s better than an unexpected debit that leaves you overdrawn. Never just let it slide, because that’s when things snowball with missed payment fees.
Break the debt cycle: The biggest danger is making payday loans a habit. It can start to feel normal to always have one or two loans on the go. Break the cycle if you can – even if it means tightening your budget for a couple of months to get out of it.
Once you’re clear, start building a small emergency fund with whatever you can save, so next time an unexpected expense hits, you have your own money to fall back on. Even a few hundred in savings can prevent the need for a $500 loan that costs $650 to repay.
Know your rights: The payday lending space has seen new rules (like the 10% income cap for repayments), and regulators keep an eye on it because of the harm it can cause. If you feel a lender is treating you unfairly or overcharging beyond the allowed fees, lodge a complaint. ASIC (the regulator) and AFCA (the dispute resolution body) can investigate. A financial counsellor (available for free through the National Debt Helpline 1800 007 007) can give you tailored advice, help you negotiate with lenders, and tell you about relief options.
Borrowing responsibly is key. Payday loans aren’t inherently “bad” – they serve a purpose for short-term cash needs – but they’re dangerous if misused. The best outcome is using one sparingly, paying it off as agreed, and moving on. The worst outcome is letting it become a crutch that drags you deeper into money troubles.
We’re all human and life happens – needing a quick $200 or $500 sometimes makes perfect sense. Just make sure you’ve considered all angles.
In a nutshell: Use payday loans only as a last resort, keep the amount small, and have a solid repayment plan. Whenever possible, opt for lower-cost alternatives like PressPay’s 5% wage advance or community no-interest loans. Your future self (and your bank balance) will thank you for avoiding the debt spiral. Smart financial choices always beat the short-term rush of “easy money” that comes with a nasty sting in the tail.
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