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Pay Advance Apps Australia

Find out what pay advance apps are and how they work right here with Savvy.

Written by , updated on December 22nd, 2023

Written by , updated on December 22nd, 2023

In Australia, pay advance apps are emerging as a potential solution for bridging temporary financial shortfalls. These apps essentially allow you to access a portion of your expected salary early, offering a quick alternative to traditional loans.

However, before tapping into your app, it's crucial to understand how they work, the potential benefits and drawbacks and how they compare to other financial options. Dive into Savvy's comprehensive guide to pay advance apps right here today!

What are pay advance apps and how do they work?

Pay advance apps, also known as pay on demand apps, offer a novel way to access a portion of your expected wages early. Unlike traditional loans, they don't involve credit checks or high interest rates. Instead, they connect to your bank account and analyse your income and spending patterns to estimate the amount you can safely borrow without impacting your future payslip.

Typically, you can advance a percentage of your upcoming salary (often around 20% to 50%, capped at a maximum amount) for a small fee, which is usually a flat charge. Once your next payslip arrives, the advanced amount is automatically deducted, along with the fee.

Here's how the process typically works:

Download and sign up: choose a reputable pay advance app and complete the registration process, linking your bank account.
Eligibility check: the app analyses your income and spending data to determine your borrowing limit.
Advance request: choose an amount you want to advance within your eligible limit.
Instant access: upon approval, the funds are electronically deposited into your linked bank account in minutes.
Repayment: on your next payday, the borrowed amount and fee are automatically deducted from your payslip.

What are the pros and cons of using a pay advance app?

It’s important to understand the pros and cons of pay advance apps before you dive into them. Some of the main areas to consider are:

Pros of using pay advance apps:

Quick access to cash: get immediate access to a portion of your expected salary to cover unexpected expenses or bridge short-term financial gaps where loans may have taken longer to process.
Flexible borrowing range: certain apps may allow you to receive up to 50% of your payslip’s funds early, which could be as much as $2,000 with some providers.
No high interest: unlike traditional loans, pay advance apps avoid interest rates, potentially making them cheaper than some high-interest credit products.
Convenient and easy to use: download the app, link your bank account and request an advance – the process is usually quick and straightforward.

Cons of using pay advance apps:

Fees: while avoiding high interest, pay advance apps charge flat or percentage-based fees for each advance, which can add up over time, especially for frequent users. For example, a 5% fee on $300 being advanced every fortnight will add up to $390 over a year.
Eligibility restrictions: not everyone qualifies for pay advance apps, as they might have minimum income requirements or limitations based on employment type.
Short repayment terms: in many cases, repayment terms for advanced payments are no longer than one month, meaning you may not be able to space out your instalments and repay your debt more comfortably as you would a loan.
Temptation of overborrowing: such easy access to funds can lead to overborrowing, impacting your future pay and potentially creating a cycle of dependence.

What are the alternatives to using a pay advance app?

If you’re looking for an alternative option for borrowing upwards of $2,000 for emergency purposes, you may be able to apply for a small loan, which you can do through Savvy. With a loan, you can borrow up to $5,000 and take as long as two years (or as few as 16 days) to repay your debt, with instant outcomes when you apply through us and the potential for formal approval and funding as soon as the same day. These can be used however you like, from buying a new phone to covering emergency bills.

Unlike pay on demand apps, wage advances through small loans aren’t automatically deducted from your payslip, meaning you can space them out over as much time as you need to repay them comfortably. However, it’s important to note that these loans come with interest and fees which also add up.

Some of the other available alternatives you may look to if you need cash fast include:

Credit card cash advance: allows you to use your card to obtain cash, albeit with steep interest rates applying
Bank account overdraft: allows you to withdraw funds beyond $0 up to an approved limit from your account, with potentially high interest and fees also applying
NILs: certain low income-earners may qualify for a No Interest Loan (NIL), which can be used for essential items such as household appliances, car repairs and more

Common questions about pay advance and pay on demand apps

Will my pay advance app conduct a credit check?

No – typically, pay advance apps do not perform credit checks. They mainly rely on your income and spending history to determine your eligibility and borrowing limit. This can make them accessible even for individuals with low credit scores.

Can I use a pay advance app through my bank or employer?

Yes – you may have access to a pay advance or pay on demand app through either your bank or employer. While there are more limited options in these areas as of the end of 2023, you may wish to check if either your bank or employer offers this service if you’re considering using it.

Will I be able to repay my advanced funds over more than one pay cycle?

This depends on the specific app. Some offer extended repayment options for larger advances of up to four cycles, while others strictly require repayment within your next pay cycle. Be sure to check the app's terms and conditions before requesting an advance.

What happens if I overdraw on my account?

If your bank account doesn't have enough funds to cover the automatic deduction of your advance and fees on payday, you might incur overdraft fees from your bank. Additionally, depending on the app's policies, they might charge additional late fees or restrict future access until the outstanding amount is settled. It's crucial to avoid overdrawing your account by carefully considering your borrowing limit and ensuring you have sufficient funds at payday to cover the deduction.

Helpful small loan guides

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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Disclaimer and important things you should know

Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.

We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.

For more information about us and how we conduct our business, you can read our privacy policy and terms of use.

© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.

© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.

1300 974 066

Sign up to our newsletter

Disclaimer and important things you should know

Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.

We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.

For more information about us and how we conduct our business, you can read our privacy policy and terms of use.