Payday loans
"Payday loan" is the everyday name for what Australian law now calls a Small Amount Credit Contract. The name is older than the rules that govern it, and the rules are the part worth knowing.
Where the name comes from
It described a loan repaid in one go out of your next pay. That structure is largely gone from the regulated Australian market: a small amount credit contract is repaid in instalments across the term, not in a single lump on payday. The name has stuck to the product anyway, which is why people still search for it.
What the law does here
Small amount credit contracts are among the most heavily regulated consumer credit in Australia. Fees are capped rather than left to the lender, the contract cannot charge interest, the term has limits, and a lender has to assess whether the repayments fit your circumstances before approving anything. Several of the practices the name is associated with overseas are simply not lawful here.
The caution that belongs with the name
The protections are real, and the cost is still high relative to mainstream credit. That is the trade the format makes: small amounts, short terms, no security, fees that reflect it. Check the alternatives first. A hardship arrangement with the provider you owe, a payment plan, or a Centrelink advance will usually cost you less than any loan, and the warning at the foot of this page lists where to start.
The contract behind this name
Small amount loan
A fee-based loan with no interest, for a shortfall you will clear within three months.
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