What are Pay Day Lenders and why are they costly to use?

Payday or short-term lenders are commonplace in the finance industry, and can be costly to use.

Payday lenders are legally permitted to charge up to a 20% establishment fee and a 4% per month account keeping fee. They can also charge up to 200% as a default fee if repayments are missed.

This means on a $1000 loan, you could be charged up to $200 for an establishment fee, and $40 per month as an account keeping fee. You could also be charged up to $2000 if you miss a payment.

Taking all of this into account, you could expect to pay back up to $1680 on a $1000 loan, effectively paying 68% in fees on the loan. If paid over a 12-month period, this equates to $65 per fortnight

As a non for profit, here at Fair Wealth Australia, we aim to offer a low-cost alternative. For this reason, we offer small loans with a competitive 50% discount on what can be charged. Our fees are 12% establishment fee and 2% monthly account keeping fee.

For comparison, on a $1000 loan from Fair Wealth Australia, paid over a 12-month period, you can expect to pay a $120 establishment fee, a $20 per month account-keeping fee and have a fortnightly repayment of just $50. This is priced competitively and savings are passed on to our customers.

Consider your options, and make a comfortable decision when you borrow!

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