Cash Loans Australia

Get the low down on how Australian cash loans work with our quick guide to shorter-term borrowing.

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Last updated on May 4th, 2022 at 03:00 pm by Bill Tsouvalas

Cash Loans Australia

It makes sense to spread payments, and it’s not always wise or practical to spend big all at once. If you’ve been hit with an unexpected bill, or even if you just need a holiday – one option is a cash loan. Australia has many specialist short-term loan providers, and access to money is fast.

I need funds fast. Will an Australian cash loan work for me?

Cash loan products offer borrowers sums between $300 and $5,000. If that covers what you need, quick access to funds is the easy part. Cash loan regulations got overhauled in 2013. The resulting range of products is designed for the way Australians live today. Online application and document submission mean many loans get approved on the same day.

To apply, you’ll need three months worth of bank statements to hand. You’ll also need ID and proof of address. If you’re employed, your lender will want to see some recent payslips. If you’re self-employed, evidence of income can come from bank statement credits. It’s better to assemble more documentation than you need. Once your lender has reviewed the information, and they’re happy to proceed, funds get transferred to you. That happens quickly – usually on the same working day.

Can anybody take out a cash loan?

Cash loan lenders will consider applications from Australian residents and citizens. You’ll also need to be 18 or over, and able to demonstrate a regular form of income. That can come from full-time, part-time, or self-employment. You can even apply if some or all of your income is from benefits. Cash loan regulators set clear guidelines for providers. Your application will be judged on your ability to pay the loan back, rather than your credit history.

Why a cash loan and not a personal loan or credit card?

It’s great to know your precise monthly outgoings. If you’re in a temporary cash flow fix, temptation might drive you just to use a credit card. However, while that will work, it might not be the savviest option available. Cards can work well for day-to-day expenses if you’re able to pay the balance in the same calendar month. If you don’t, things can start to get costly, and balances start stacking up.

With a cash loan, the cost of borrowing is fixed. It’s like saving regular amounts – but without the inconvenience of having to wait. Cash loans allow you to get what you need – now. They also offer the advantage of knowing where you stand until the loan gets paid back. Many Australians find cash loans easier to budget for and manage than credit cards.

Personal loans tend to be offered by banks and other financial institutions – on their specific terms. Cash loan providers tend to be specialist lenders. They work to government guidelines and base approval decisions on your ability to pay back the loan. Fees and costs across products are capped as a percentage of the loan amount. You’ll pay a maximum of 20% in establishment fees, and 4% on repayments.

Personal loan repayments run between one and seven years, and the minimum loan amount is usually $5,000. Cash loans can be paid back more quickly. Periods range from as little as 16 days. They run up to one year for smaller loans between $300 and $2,000, and two years for loans from $2,001 to $5,000. You set your repayment period preferences. Don’t want to be in a lot of debt? Prefer to pay it back as soon as you can afford it? A cash loan might suit you better than a personal loan.

Can I use a cash loan to get me through a temporary cash flow issue?

Fact is, expenses don’t always pop up when we can plan for them. Urgent roof repairs, a broken laptop, or a fridge on the blink – they all happen without warning. However, you can use your regular income to pay for the unexpected, without depleting available cash. Spreading the cost means you can take repairs and breakdowns in your stride. Borrowing over shorter periods offers two significant advantages. Firstly, your fees and repayment amounts are fixed – meaning they’re easily absorbed by your normal pay cycle. Secondly, you won’t be in debt for very long – so the cost of borrowing is affordable. Let’s look at an example scenario.

Regular earnings and expenses

John takes home $4,000 per month. His mortgage payments are $1,800, and all his regular debits, including utility bills, total $600 every month. After deducting monthly living expenses of $600, John has a comfortable disposable income of $1,000 per month.

The unexpected expense

John chooses to spread his payments over ten months. He pays a loan establishment fee, which is capped at 20% of the loan amount – and won’t cost more than $200. His monthly payments get capped at 4% of the initial loan amount, so they cost him $40 per month.

The cash loan costs

John takes home $4,000 per month. His mortgage payments are $1,800, and all his regular debits, including utility bills, total $600 every month. After deducting monthly living expenses of $600, John has a comfortable disposable income of $1,000 per month.

The fixed payments

John’s monthly loan payments are just $140, leaving him with $860 of disposable monthly income. That means he only needs to tighten his belt to the tune of $35 per week. It’s an expense that’s easily managed – and he’s back on the road.

Things you should avoid when taking up a cash loan

If you have difficulty making payments, don’t stop communicating. Always talk to your lender in good time. Cash loans come with a ‘debt spiral cap’ – so, even if you experience hardship, your lender will never force you to pay back more than 200% of your original loan amount.

Don’t use cash loans to fund day-to-day expenses

Responsible Australian cash loan providers work to strict guidelines. They won’t approve your application if you’ve taken two or more cash loans in the previous 90-day period – or you’re in default of an existing agreement.

Don’t over-borrow

There is no real limit to how you can use an Australian cash loan – many people use them to pay for rental bonds, holidays, education, medical and even veterinary expenses. Responsible lenders love responsible borrowers. Your application is more likely to be approved if it’s realistic when compared to your circumstances.