Payday loans (short term money, fast cash) are advertised on TV and the internet to tempt you into getting cash quickly to pay bills or money owing. Payday loans can be a trap that leads to more financial stress and hardship.
Consumer Action Koori Help provides information and support for Aboriginal and Torres Strait Islander community members dealing with consumer issues such as payday loans.
If you need support, visit their website or call their free Koori Helpline: 1800 574 457
The trap with payday loans
Default Rates
If you fail to pay back the loan on the due date you will usually be charged default fees that are added to your debt. The total amount that can be charged in default fees can be up to twice the amount you borrowed.
Direct Debit
When you sign up to a direct debit, lenders can take money straight out of your bank account once money hits it. This can happen before food, rent and other essential bills are paid.
Payday lenders often get you to sign a document authorising them to automatically direct debit payments from your account. You may want to stop the direct debits because you want to make payments another way or you no longer want to pay the business at all. Cancelling a direct debit does NOT make the debt go away and it won't stop a payday lender from chasing you for money.
Sometimes your credit report may be affected if you cancel a direct debit and fall behind on making payments to the business. The law does not allow you to cancel direct debits from your credit card. You can only do this by cancelling your credit card.
If you can't pay for food or keep up with bills, there are cheaper options than a payday loan:
There are better options available than a payday loan, including:
- You can ask for an affordable repayment plan through your bank, electricity, gas, water or phone company by asking to speak to their financial hardship team
- You might be able to get an emergency relief grant for your energy bills
- you might be eligible for a no interest loan to pay for your household goods or important services such as medical treatment
- If you need help urgently with living expenses, there are emergency relief programs to help you with things like food, transport, housing, essential services and clothing
For more information see the National Debt Helpline Website.
Financial Stress
Financial stress can impact your quality of life and it can be harder to access:
Protections available to you
Consumer protection laws protect you when you buy goods and services or sign up to loans. Consumer Action Koori Help uses consumer protection laws to help you when you have a problem with:
- Payday loans or fast cash
- Renting household items (rent-to-buy)
- Your gas, water and electricity
- Funeral products
- A car you have bought
- Debt collectors
- Debt consolidation or debt management
- Borrowed money (loans and credit)
- Phone and internet contracts
- Faulty goods and services
- A bank
To find out how Consumer Action Koori Help can support you, visit their website or call their free Koori Helpline: 1800 574 457
