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Low Cost Payday Loans

Even when you need funds fast, it’s worth considering the cost of borrowing. Here are some ways you can keep it down.

Written by 
Savvy Editorial Team
Savvy's content writing team are professionals with a wide and diverse range of industry experience and topic knowledge. We write across a broad spectrum of finance-related topics to provide our readers with informative resources to help them learn more about a certain area or enable them to decide on which product is best for their needs with careful comparison. Meet the team behind the operation here. Visit our authors page to meet Savvy's expert writing team, committed to delivering informative and engaging content to help you make informed financial decisions.
Our authors
, updated on September 12th, 2023       

Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.

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$500
$50,000


Paid in 60 mins if approved*
Written by 
Savvy Editorial Team
Savvy's content writing team are professionals with a wide and diverse range of industry experience and topic knowledge. We write across a broad spectrum of finance-related topics to provide our readers with informative resources to help them learn more about a certain area or enable them to decide on which product is best for their needs with careful comparison. Meet the team behind the operation here. Visit our authors page to meet Savvy's expert writing team, committed to delivering informative and engaging content to help you make informed financial decisions.
Our authors
, updated on September 12th, 2023       

Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.

We’ve all been there. Disaster strikes, and you need funds fast to solve a crisis. Sudden costly car repairs can make it challenging to work. An injury or illness can wreak even more havoc on your income. Pets, owning a home, kids, appliance repairs, and running your household – all can throw up unexpected and unwelcome events and costs. When you need to address a problem, but you don’t want to spend a fortune – low cost pay day loans offer the freedom of softening the blow.

Low cost payday loan borrowing – shorter-term versus longer-term

Payday loans owe much of their affordability to capped fees – but that’s not where the benefits stop. Along with a structure that makes it instantly easy to work out borrowing costs, payday loans offer much to busy consumers. When you’re looking to find a solution to a temporary cash flow problem, you want something fast. Cash loans can indeed be arranged quickly – but you need to be able to work out what you’re going to pay swiftly too. Payday loans have you covered there.

  • Payday loan repayment fees are capped at 48% of the loan amount over the course of 12 months
  • Establishment fees are capped at $400 and built into your repayments

Understanding low cost payday loan options

Payday loans are structured to provide relatively cheap shorter-term borrowing. That means they work best when you don’t need a long-term solution. Because fees get capped as a fraction of the loan amount, you get charged per repayment – not by using an annual percentage rate like with personal loans for larger sums. Think of it like this – if you’re setting up a payday loan with monthly repayments, you’re paying a monthly fee to the lender. That’s how the lender makes money. Therefore, it follows that the fewer repayments you make, the lower your borrowing costs.

Personal loan lenders, like banks, make their money differently. They set a longer minimum repayment period (usually, personal loans run from two to seven years), and interest gets charged annually – they don’t have a fixed fee per repayment. They often charge a lower rate, but it adds up over the period of the loan.

Whichever of the two routes you choose to borrowing, you’ll always need to meet an associated cost. With a low cost payday loan, however, reducing the repayment period is the best way to keep your costs down. Let’s take a $2,500 payday loan and assume you’re paying it back over ten months:

  • Establishment fee capped at $400
  • Capped monthly fees mean ten payments of $100, in addition to your establishment fee and the loan principal of $250 per month, result in a total of $390
  • Maximum amount you’ll pay in fees – if you make your payments on time – is $1,400

Now let’s look at that same $2,500 payday loan and reduce your repayment term. Instead of spreading the cost of your purchase over ten monthly pay periods, you opt for just four:

  • You again pay a maximum establishment fee of $400
  • Four monthly payments of $825
  • Maximum amount you’ll pay in fees – if you make your payments on time – is $800

That’s a saving of $600, which is a significant amount. The lowest cost payday loan borrowing is when you repay as quickly as you can afford. They represent a very sound way to borrow funds over shorter periods.

Is it possible to get cheap secured payday loans?

Some loan providers offer the option of securing your borrowing against a valuable item. However, this isn't the case for payday loans, which are unsecured. Borrowers need to think very carefully about securing property against a loan. There are several reasons for that:

  • When you use an item as collateral, you risk losing it. Life, careers and finances are unpredictable. Think about whether you can afford to lose your car, for instance, if you use it for work
  • In some cases, you may be offered a cheaper loan if you offer a car or other high-value item as collateral. However, in such cases, it might be more sensible to build your borrower reputation with the lender by starting small. No matter what size loan you take, repaying it on time will improve your credit rating. In addition to that, your lender will see you’re reliable. They’ll probably be willing to let you build your borrowing amounts over time, without the need for security
  • Secured loans are slower to arrange than instant payday loans. When you apply for a low cost payday loan, the process is primarily limited to the lender assessing your documents. That makes for fast turnarounds of applications. Lenders mainly need to see that you can afford the loan. Adding an item as security to the equation means there’s more work to do – and the process takes longer as a result.

What do Australian payday loan borrowers use funds for?

Payday loans can be used for a variety of purposes. Australians utilise payday loans to meet all sorts of planned and unexpected costs. Taking out an unsecured loan means you’re not limited when it comes to spending funds. When you need to spread the cost of repairs to your car or home, higher-than-normal gas or electricity bills, medical or dental expenses – and a whole host of other things – payday loans are the go-to option.

How do I apply for a payday loan?

Applying for a payday loan couldn’t be any more convenient. Online loan providers offer easy applications. Digital document submission makes the process quicker than traditional forms of lending. Your application will take minutes, and your funds will be with you in no time.

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Disclaimer:

The information on this website is of general nature and does not take into consideration your objectives, financial situation or needs.

For loans between $2,050 and $5,000, the APR is between 21.24% (minimum) and 48% (maximum) per annum. Comparison rate of 65.4962%. Minimum term is 16 days and maximum term is 24 months. The cost of the loan is a $400 establishment fee and monthly interest charged on the amount borrowed. For example, a loan of $3,000 over 3 months with an APR of 48%, (comparison rate of 65.4962%), will have an establishment fee of $400, monthly repayments of $1,225.20. Total repayments of $3,675.60 and total interest payment of $275.60.

Warning: A comparison rate indicates the true cost of a loan. Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.

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