In July of 2010, Australia introduced the revised Uniform Consumer Credit Code, now called the National Consumer Protection Act 2009. Designed to protect Australians from shady or illegal lending practices, this act is important to understand if you’re looking for an online payday loan in Australia.
Legally the Company Must Examine Your Credit
If you’re looking for a payday loan with no credit check in Australia, you may find it difficult. Payday loans in the U.S. often allow you to skip a credit check, but Australia is different. Before a company can offer you a payday loan, they must examine your credit and decide if you have the means to repay the loan. If they believe you will have difficulty repaying the Australian payday loan, they cannot legally enter into contract with you. When applying for a payday loan in Australia, be prepared to provide bank statements, pay stubs, rental agreements, and any other bills you pay monthly like a mortgage, credit cards, or utilities.
Any Credit Agency Must Be Licensed
Note that the company offering to extend you credit must be licensed. In order to gain a license, the lender must have solid practices in place to handle and resolve disputes. Part of this involves having a plan in place to help you pay back the loan if you run into difficulties due to hardship. Without a membership in an organization specializing in resolutions, the license is not going to be granted. Make sure any company offering you a payday loan in Australia has a license, some try to bypass the laws, so it’s important to verify a valid license is in place. You can find this information out by calling the Australian Securities and Investment Commission at 1300 300 630.
Understand the Repayment Terms
If your loan is smaller than $2,000, a company cannot require you to repay the loan in less than 15 days. Fifteen-day loans are illegal. You must be given repayment terms of at least 16 days to a year.
Pay Attention to the APR
Just as there are limits on how quickly you must repay a loan, payday loans also have strict limits on the APR and fees a company can charge you. Payday loans in Australia are loans of no more than $2,000. For this type of loan, you cannot be charged more than 20% as a fee and no more than 4% in monthly maintenance charges. If you fail to pay your loan back, the amount you eventually pay back cannot be more than 200% of the original loan value.
Learn more about Australia’s National Credit Act at MoneySmart.gov.au. This site is full of information you need to decide if a payday loan is right for you. Australia offers other loan products, such as the StepUp loan or Centrelink Advance that may be a better option.