Need Money Fast? 5 Options That Are Better Than a Payday Loan

Has an unexpected bill arrived while payday is still several days away?

A payday loan may seem like a convenient way to cover the gap. However, payday loans can include substantial fees, so it is worth checking whether another arrangement could meet your needs at a lower cost or place less pressure on your next budget.

The right option depends on:

• What the money is needed for.

• How soon the expense must be paid.

• Whether you meet the eligibility requirements.

• The total cost.

• How the repayment will affect your future income.

In this guide, we explain five alternatives to payday loans that you may want to consider before borrowing.

What Are the Main Alternatives to Payday Loans?

Depending on your circumstances, alternatives may include:

• Asking the biller for a payment plan or hardship assistance.

• Applying for a No Interest Loan.

• Checking your eligibility for a Centrelink advance payment.

• Considering a wage advance if you receive regular employment income.

• Seeking emergency relief from a community organisation.

Some of these options have no interest or fees. Others, including wage advances, may involve a cost. Comparing the total amount you will repay is important before making a decision.

What Is a Payday Loan?

In Australia, a payday loan is commonly known as a small amount credit contract. It generally allows you to borrow up to $2,000 for a term of between 16 days and one year.

Licensed payday lenders generally charge fees rather than interest. The maximum charges can include:

• An establishment fee of up to 20% of the amount borrowed.

• A monthly fee of up to 4% of the amount borrowed.

• Default fees if a repayment is missed.

For example, a $1,000 payday loan could include an establishment fee of up to $200, plus a monthly fee of up to $40 for each month charged. Default fees could increase the cost further.

This is why it is important to compare the total repayment amount rather than focusing only on how quickly the money may be available.

Five Alternatives to Payday Loans

1. Ask for a Payment Plan or Hardship Assistance

When the expense is a bill, fine, credit repayment or service account, consider contacting the organisation before borrowing money to pay it.

Depending on the provider and your circumstances, it may be able to offer:

• An extension of the payment deadline.

• Smaller instalments.

• A temporary repayment reduction.

• A short payment pause.

• Access to a hardship program.

• A review of late fees or other charges.

For utility and telecommunications bills, available arrangements may include an extension, instalment plan, Centrepay deductions, rebates or vouchers.

Lenders must also consider requests for financial hardship assistance, although the arrangement offered will depend on an assessment of your circumstances.

A suitable payment arrangement may resolve the immediate problem without adding a new credit commitment.

What Should You Say When Requesting Assistance?

Be prepared to explain:

• Why you cannot make the full payment.

• How much you can realistically afford.

• Whether the problem is temporary or ongoing.

• When you expect your circumstances to improve.

• The arrangement you would like the organisation to consider.

Only agree to an amount you can reasonably manage after allowing for essentials such as rent, food, utilities, transport and medicine.

2. Check Whether You Qualify for a No Interest Loan

A No Interest Loan, sometimes called a NIL, may be an alternative when you need an essential product or service but do not have enough savings available.

Eligible applicants may generally be able to borrow:

• Up to $2,000 for approved essentials such as appliances, furniture, car repairs, registration, medical expenses, education costs or employment-related expenses.

• Up to $3,000 for a bond on a new rental property or recovery from a natural disaster.

There is no interest, and there are no fees or charges, so you repay only the amount borrowed.

A No Interest Loan is not provided as cash. The approved supplier or invoice is generally paid directly.

Eligibility, approved uses and repayment-capacity requirements apply. An application must still be assessed, and approval is not automatic.

A No Interest Loan may be useful when:

• The purchase is an approved essential.

• You meet the eligibility requirements.

• You have an invoice or quote.

• You can afford the agreed repayments.

Because the funds are restricted to approved goods and services, this option will not be suitable for every expense.

3. Consider a Centrelink Advance Payment

If you receive an eligible Centrelink payment, you may be able to receive part of a future payment early.

A Centrelink advance is not an additional benefit or bonus payment. It is part of the money you would otherwise receive later. You repay it through reductions to your future Centrelink payments.

Eligibility, available amounts and repayment arrangements depend on the type of payment you receive and your individual circumstances.

Before applying, check how much your future payments will be reduced and whether the remaining amount will cover your regular living expenses.

A Centrelink advance may be worth considering when:

• You already receive an eligible payment.

• You meet the relevant waiting period and eligibility rules.

• You can manage the deductions from future payments.

• The expense cannot reasonably be delayed.

Because this option brings future income forward, it can still create pressure during the following weeks or months. Review your upcoming budget before accepting an advance.

4. Explore a Wage Advance if You Are Employed

A wage advance allows an eligible worker to access part of their regular pay before their usual payday.

It works differently from a payday loan. Rather than taking out a small amount credit contract for a separate loan amount, you receive an advance calculated using your regular employment income. Depending on the service, fees and interest may apply.

With us, eligible customers can request up to one-quarter of their net pay, subject to a maximum advance of $2,000.

Your available limit is determined through an assessment of your employment income and recent bank transaction information. We receive a read-only copy of relevant transaction data and cannot move money from your bank account through that connection. Approval is not guaranteed.

How Much Does a MyPayNow Wage Advance Cost?

We currently charge:

• A 5% fee on the amount advanced.

• Interest at 24% per annum on the outstanding balance, capped at 62 days.

For example, if you receive a $100 advance and hold it for seven days, the published cost is:

These figures are based on our current published fees and example.

Your repayment is normally scheduled by direct debit on or around your next payday. A debit card repayment option is also available.

In some circumstances, you may be able to request that the repayment be split over two pay cycles or delayed until your next pay cycle through your account.

When Might a Wage Advance Be Worth Considering?

A wage advance may be one option when:

• You currently receive regular employment income.

• The expense is temporary or unexpected.

• The amount needed is within your approved limit.

• You understand the applicable fee and interest.

• You can meet the repayment without falling short on essentials.

It may not be appropriate when you regularly run out of money before each payday. Repeatedly bringing income forward can leave less money available from future pay and may make an ongoing budget shortfall more difficult to manage.

Before proceeding, compare the cost and effect on your next pay with payment plans, available savings, no-interest options and community assistance.

5. Look for Emergency Relief and Community Support

If you cannot afford food, medicine, housing, transport or essential utility costs, taking on a new repayment may not be the safest first step.

Community organisations and charities may be able to provide assistance such as:

• Meals or food parcels.

• Supermarket, transport or chemist vouchers.

• Clothing or essential furniture.

• Part-payment of utility bills.

• Back-to-school support.

• Referrals to housing and crisis services.

The type of support available depends on your location, circumstances and the resources of the organisation. Moneysmart lists emergency relief services and also recommends Ask Izzy for finding local support.

You can also contact the National Debt Helpline on 1800 007 007 for free and confidential financial counselling.

Financial counsellors do not lend money or sell financial products. They can help you understand your debts, communicate with creditors, explore hardship arrangements and prepare a realistic plan.

How to Choose the Right Payday Loan Alternative

Before choosing any credit product or advance, consider the following questions.

Is the Expense Essential and Urgent?

Separate expenses that genuinely need to be paid now from those that can be delayed, reduced or avoided.

For example, an urgent repair to a car needed for work may require a different solution from a purchase that can wait until your next pay.

Can the Organisation Give You More Time?

Contact the biller, lender, utility company, medical provider, landlord or relevant government agency.

Ask whether it can provide:

• An extension.

• An instalment arrangement.

• A rebate or voucher.

• Hardship assistance.

• Another affordable payment option.

Making contact early will generally give you more opportunity to discuss the available arrangements.

What Is the Total Cost?

Check:

• Establishment or service fees.

• Interest.

• Monthly charges.

• Default or missed-payment costs.

• The total amount to be repaid.

• The repayment date.

Receiving money quickly does not necessarily mean the option is affordable or suitable.

How Will the Repayment Affect Your Next Budget?

Write down the income you expect to receive and your essential expenses during the repayment period.

Include:

• Housing.

• Groceries.

• Utilities.

• Transport.

• Insurance.

• Medicine.

• Existing debt repayments.

• Other unavoidable costs.

Consider whether the repayment could leave you needing another advance or loan for basic expenses.

Is This a One-Off Expense or an Ongoing Shortfall?

Credit or a wage advance may sometimes help with a specific timing issue. It is unlikely to resolve a budget that is short during every pay cycle.

When the shortfall is ongoing, consider speaking with a free financial counsellor before taking on another repayment.

Warning Signs That Borrowing Could Make the Situation Harder

Pause before applying when:

• You need new credit to repay existing credit.

• You regularly borrow for rent, groceries or utilities.

• You are applying to several providers at the same time.

• You do not know how you will make the repayment.

• The repayment would leave little or nothing for essentials.

• You are trying to recover gambling losses.

• Your employment income has stopped or become uncertain.

These signs can indicate that hardship assistance, emergency relief or financial counselling may be more useful than another financial product.

Frequently Asked Questions

What Is the Lowest-Cost Alternative to a Payday Loan?

A payment arrangement, eligible Centrelink advance, emergency assistance or No Interest Loan may cost less because these options may not charge interest or payday loan fees.

The most appropriate option depends on the expense, urgency, eligibility requirements and effect on your future budget.

Is a Wage Advance the Same as a Payday Loan?

No. They are different financial products.

A payday loan is generally a small amount credit contract of up to $2,000, repayable over a period of between 16 days and one year. A wage advance provides an eligible worker with early access to part of their regular pay.

Both can reduce the money available later, and a wage advance may include fees and interest depending on the provider.

Does MyPayNow Perform a Credit File Enquiry?

We do not make an enquiry on your file with a credit reporting agency.

We still assess your eligibility using information including your employment income and recent banking activity. Our assessment may result in an application being declined.

Can I Use MyPayNow if Centrelink Is My Only Income?

No. Our wage advance service is available to eligible customers receiving regular income from an employer.

Centrelink income may be considered alongside employment income, but Centrelink payments alone do not meet this requirement.

How Quickly Is an Approved MyPayNow Advance Sent?

Once an advance has been approved and requested, we send the payment through Osko on Australia’s New Payments Platform.

Funds are usually received within seconds, including on weekends. Availability depends on the receiving bank, and a delay may occur if the bank does not support Osko or the service is temporarily unavailable.

What Should I Do if I Cannot Afford an Existing Repayment?

Contact the lender or provider as soon as possible and ask about financial hardship assistance.

Only agree to a revised arrangement that you can realistically afford. For help assessing your options, contact the National Debt Helpline on 1800 007 007.

If you are having difficulty with a repayment to us, contact our support team as soon as possible so we can discuss the options that may be available through your account.

Should I Take Out Another Loan to Repay a Payday Loan?

Taking on new debt to repay existing high-cost debt can increase the risk of a debt cycle.

Before refinancing or borrowing again, contact the existing lender’s hardship team or speak with a free financial counsellor. Compare the total cost, repayment period and effect on your essential living expenses before agreeing to any new credit.

Compare Your Options Before Borrowing

When an expense cannot wait until payday, the first financial product you find will not always be the most appropriate one.

Start by asking whether the expense can be delayed or paid in instalments. You can then check your eligibility for a No Interest Loan, Centrelink advance or emergency assistance.

When you receive regular employment income and the expense is genuinely short term, a wage advance may be another option. Its fee, interest and effect on your upcoming pay still need to be considered.

You can learn more about how our wage advance works and review our current fees, assessment process and repayment options before deciding whether it is appropriate for your circumstances. Terms, conditions and eligibility requirements apply, and approval is not guaranteed.

The information provided in this blog is for general informational purposes only and does not constitute financial advice. It is not tailored to the specific circumstances of any individual. Before acting on the information, you should consider whether it is appropriate for you, having regard to your objectives, financial situation and needs.