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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!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.


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