Payday loan – should I get one?

Don’t get caught out with financial solutions that don’t have your best interests at heart.

Stop before you get a payday loan

Payday loans have received some bad press, and some providers have had to answer to complaints made to ASIC, the regulator responsible for such lenders. There have been cases where these lenders have been penalised; and some have had to pay back millions of dollars to their customers in compensation. 

What is a payday loan?

Payday loans are small amounts (generally $50-$2,000) that must be paid back within an agreed term from a number of days to one year.

They get their name from the fact that many people use them to make up a shortfall between when they run out of money and payday. Controversial ads that have got these types of lenders in trouble show people running out of money but needing to pay bills or wanting to indulge in something before they get paid.

They’re usually provided by small organisations that specialise in these kind of loans – not big banks and credit unions. Heritage Bank does not offer payday loans. 

The reason payday loans have been targeted by the regulators is that they’re often marketed to/used by people on lower incomes. The fees and charges can be very high, and can potentially spiral out of control if the required payments are not met. 

What are the rules for payday loans?

In the past, payday lenders were able to charge very high interest rates, which meant that sometimes customers’ debts could add up to several times the original amount borrowed.

In 2013, the rules changed significantly, and they’re continuing to be looked at to this day. 

Read more about payday loan rules at

What are the alternatives to a payday loan?

By nature, a loan incurs interest – so you have to pay back more than you borrow. This is the same for a payday loan, credit card and many other options. You will need to consider how you will manage your repayments before making any decisions about the type of loan which may be right for you. 

If you are considering a payday loan, there are lots of alternatives that could save you money in the long run, and prevent you from going in to debt again – it all depends on your circumstances, everyone’s situation is different. It’s all about knowing what your options are, and planning for the future so you can avoid borrowing wherever possible. 

It’s up to you to get smarter about your personal finances. We are here to help – pop into your local Heritage branch, call us 24/7 on 13 14 22 or enquire online to chat to us about the best personal loan options for you. 

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