Understanding Repayment Schedules for Short-Term Loans

When you borrow money for a short period, it is easy to focus on the amount you can access today. But understanding what happens afterwards is just as important.

A short-term loan repayment schedule tells you when repayments are due, how much you are expected to pay and when the balance should be cleared. Reviewing that schedule before you commit can help you understand whether the repayments are likely to fit alongside your wages and essential expenses.

In this guide, we explain how short-term loan repayment schedules generally work, what can affect repayment amounts and what to check before agreeing to short-term credit.

We will also explain how repayments work with us at MyPayNow, because our wage advance service is structured differently from a conventional short-term personal loan.

What is a short-term loan repayment schedule?

A short-term loan repayment schedule is a timetable showing when borrowed money must be repaid.

Depending on the credit product, it may show:

• The amount borrowed

• Interest and fees

• The amount of each repayment

• How frequently repayments are made

• The first repayment date

• The final repayment date

• The total amount payable

• How repayments will be collected

With a conventional personal loan, individual repayments commonly include part of the original amount borrowed, known as the principal, together with interest and any applicable fees.

However, not every short-term credit product works this way.

For example, a wage advance may generally be repaid on or around your next scheduled payday instead of through a longer series of principal-and-interest instalments.

That is why we recommend checking the terms of the particular product rather than assuming all forms of short-term credit use the same repayment structure.

How frequently are short-term loans repaid?

There is no single repayment frequency that applies to every short-term credit product.

Your repayment dates will depend on the product, provider and credit agreement.

Weekly repayments

Weekly repayments are generally collected every seven days.

This type of schedule may align with weekly income, but it also means repayments occur more frequently.

Fortnightly repayments

Fortnightly repayments are generally made every two weeks.

For someone who receives their wages fortnightly, this may make it easier to compare the repayment directly with each pay cycle.

Monthly repayments

Monthly repayments are made once per month.

Where the same amount is being repaid over a similar overall period, an individual monthly repayment may be larger than a weekly or fortnightly repayment because there are fewer repayment dates.

Repayment around payday

Some wage advance products work differently from conventional instalment loans.

Rather than requiring a series of regular loan repayments, the amount advanced may be scheduled for repayment on or around your next payday.

The important point is that repayment frequency does not tell you whether a product is affordable on its own.

You also need to consider how much you must repay, the total cost and how much money you will have available for essential expenses afterwards.

What determines your short-term loan repayment amount?

Several factors can influence the repayments shown in a short-term loan repayment schedule.

The amount borrowed

Generally, borrowing more means there is more money to repay.

Depending on the product, that could lead to larger repayments, a longer repayment period or a higher overall cost.

Borrowing only what you reasonably need can help limit your repayment obligation and, where charges are linked to the amount borrowed, may reduce the cost of the credit.

The length of the agreement

A shorter repayment period can mean larger individual repayments because the balance has to be cleared sooner.

For products where interest accrues over time, keeping a balance outstanding for longer may also increase the total interest paid.

Always check how the particular product calculates its costs.

Interest

Interest is an amount charged for borrowing or accessing credit.

It is often expressed as an annual percentage rate, even where the credit agreement lasts considerably less than one year.

Depending on the product, the actual interest payable may be affected by factors such as the outstanding balance and how long that balance remains unpaid.

Fees and charges

Different credit products can have different fee structures.

Depending on the agreement, these could include establishment fees, account fees, credit charges or other costs.

Rather than assessing a credit product using one fee or interest rate in isolation, look at the total amount you are expected to repay.

Repayment frequency

The same overall repayment obligation can look very different when divided into weekly, fortnightly or monthly amounts.

For example, a weekly repayment may appear smaller than a fortnightly repayment, but it occurs twice as often.

For that reason, compare the total amount payable and the impact on your budget rather than focusing only on the size of one repayment.

Example of a short-term loan repayment schedule

Here is a fictional example showing the type of information you may see in a repayment schedule.

This is a general illustration only. It is not a quote, credit offer or repayment estimate for a MyPayNow wage advance or any other product.

Repayment frequency: Fortnightly

Number of repayments: Four

First repayment: First agreed repayment date after funding

Later repayments: Every 14 days

Final repayment: Remaining principal, interest and applicable fees

Payment method: Automatic direct debit

Your actual agreement may have different dates, costs, repayment amounts and payment methods.

Check the credit contract or product terms before accepting an agreement rather than relying on a general example to estimate your own costs.

How to read a repayment schedule before you agree

A repayment schedule can contain a lot of information, but breaking it down into a few questions can make it easier to review.

1. Confirm every repayment date

Check when each payment is scheduled and compare those dates with when your income normally reaches your account.

It can also be worth considering weekends, public holidays and other circumstances that could affect the timing of your wages or direct debits.

2. Check each repayment amount

Make sure you know how much is expected to be taken on each repayment date.

Do not automatically assume every repayment will be identical. The first or final repayment may differ depending on the agreement.

3. Look at the total amount payable

The total amount payable is one of the most useful figures when comparing the cost of credit.

Compare it with the amount you will actually receive.

The difference reflects the overall cost of the credit, including applicable interest and mandatory fees.

4. Check for additional charges

Read what the agreement says about missed, failed, changed or delayed repayments.

Depending on the product, additional costs may apply or interest may continue to accrue.

5. Understand how payment will be collected

Direct debit is commonly used for repayments.

Make sure you understand which account will be debited and when the provider is expected to attempt the payment.

6. Find out what happens if your circumstances change

Before accepting credit, check how to contact the provider if you think you may have difficulty meeting a repayment.

Seeking help early can give you more opportunity to discuss the options that may be available.

How to check whether repayments fit your budget

A provider's assessment does not replace your own review of your finances.

Before committing, consider the income you realistically expect to receive during the repayment period and subtract your essential expenses.

These may include:

• Rent or mortgage repayments

• Groceries and household essentials

• Electricity, gas, water and telecommunications

• Transport

• Medical expenses

• Insurance

• Childcare or education expenses

• Existing loan or credit repayments

Then consider whether the new repayment can comfortably fit within the money remaining.

Try to leave some room for expenses that change from week to week. A repayment schedule that only works when every other cost goes exactly to plan could be difficult to manage if an unexpected bill appears.

ASIC's Moneysmart recommends considering whether loan repayments fit within your budget and looking at the total cost of borrowing. Its loan calculators can also help illustrate how factors such as repayment frequency, interest rates, terms and fees affect repayments.

Questions to ask before accepting a repayment schedule

Before agreeing to short-term credit, make sure you understand:

• How much money will I receive?

• How much will I repay altogether?

• When is each repayment due?

• Does the repayment fall before or after my regular pay arrives?

• What interest and fees apply?

• What happens if a payment is unsuccessful?

• Can I repay the balance early?

• Can a repayment date or amount be changed?

• Could changing the schedule increase the cost?

• Who should I contact if I am having financial difficulty?

• Will the repayment leave enough money for essential living expenses?

Do not proceed until you understand the important terms that apply to the agreement.

What happens if you miss a scheduled repayment?

The consequences of a missed repayment depend on the particular credit agreement.

Depending on the product and circumstances, this could involve:

• Another payment attempt

• Additional interest

• Fees or charges where permitted by the agreement

• Contact from the credit provider

• Restrictions on further use of the service

• Debt recovery activity

• Potential credit reporting consequences where applicable

Check the terms of your specific agreement to understand what applies.

Where possible, contact the provider before the repayment date if you expect you will not have enough money available.

Taking on another debt simply to meet an existing repayment can make financial pressure harder to manage.

Moneysmart recommends contacting your lender or credit provider early if you are having repayment difficulties. Depending on your circumstances and the product, options may include altering repayments or establishing a manageable payment arrangement.

Free and confidential financial counselling is also available through the National Debt Helpline on 1800 007 007.

Can a repayment schedule be changed?

Sometimes, but this depends on the provider, the credit agreement and your circumstances.

Potential arrangements could include:

• Changing a repayment date

• Splitting a repayment

• Temporarily delaying a payment

• Entering an agreed hardship arrangement

Never assume a repayment has been changed until the provider confirms it.

It is also worth checking whether changing a repayment schedule affects the overall amount payable. For example, additional interest could apply if a balance remains outstanding for longer.

How repayments work with us at MyPayNow

Our product is a wage advance service rather than a conventional short-term personal loan.

If you are approved, you may be able to request access to a portion of your net wage before payday, subject to our eligibility criteria and assessment.

We automatically schedule a direct debit from your nominated bank account for your scheduled repayment date. You can also make a payment using an eligible Visa or Mastercard debit card.

Our direct debits are processed by a third party, which means the debit can be attempted at any point during the scheduled day.

Our service is designed for the balance to be repaid in full on or around your next scheduled payday.

However, we understand circumstances can change. In some circumstances, you may be able to request a repayment delay or split through your MyPayNow account.

A delay puts the scheduled direct debit on hold until your next pay cycle. A split divides the balance into two equal repayments over the next two pay cycles.

The options available can depend on your pay frequency and account circumstances. You also cannot change the direct debit date while a payment is already pending.

If you are experiencing financial difficulty, we encourage you to contact us as soon as possible so we can discuss the options that may be available.

You can also review our Pay Advance FAQs and our guide explaining how our wage advance works for more information.

What does a MyPayNow wage advance cost?

We currently charge:

• A fixed credit charge equal to 5% of the amount advanced

• Interest at 24% per annum on the outstanding balance

• Interest capped at 62 days

For example, our current published cost example shows that if you take a $100 advance for seven days:

Amount advanced: $100

Fixed credit charge: $5

Interest: $0.48

Total repayment: $105.48

If the same $100 advance remains outstanding for 28 days, our published example shows interest of $1.93 and a total repayment of $106.93.

Approved customers can access up to 25% of their net wage, capped at $2,000, depending on their approved limit.

Once you have taken an advance, you cannot request another one until the outstanding balance has been repaid in full. Eligibility and approval requirements apply.

You should only consider requesting an advance where you believe the repayment and associated costs can be managed without affecting your ability to cover essential expenses.

Short-term borrowing alternatives to consider

Borrowing is not necessarily the only way to manage a temporary gap in your finances.

Depending on what the expense is for and your circumstances, you could consider:

• Using available savings

• Asking the bill provider about a payment plan

• Requesting extra time to pay a bill

• Checking whether hardship assistance is available

• Delaying a non-essential purchase

• Reviewing your budget for temporary savings

• Comparing other suitable forms of credit

• Checking whether you are eligible for a No Interest Loan

• Speaking with a free financial counsellor

Short-term credit may address a temporary timing difference between income and expenses, but repeatedly borrowing to cover ordinary living costs can be a sign that your budget needs further attention.

Tips for managing a short-term repayment schedule

Add repayments to your calendar

Record each repayment date and amount in advance.

A reminder a few days beforehand can give you time to check whether sufficient money is likely to be available.

Account for the repayment before spending

Treat a scheduled repayment as money that is already committed.

This can help you avoid accidentally allocating the same portion of your income to another purchase or bill.

Review upcoming irregular expenses

Look beyond your usual weekly or monthly bills.

Costs such as car registration, insurance, school expenses or medical appointments can affect the amount available for repayments.

Keep some room in your budget

Unexpected expenses happen.

Where possible, avoid relying on a repayment plan that leaves no flexibility at all after essential expenses.

Contact the provider early

If you believe a repayment may become difficult, contact the provider before the due date where possible.

Addressing the problem early may give you more options.

Frequently asked questions

What is included in a short-term loan repayment?

Depending on the product, a repayment may include some of the amount borrowed, interest and applicable fees.

Check the credit agreement for the exact repayment structure and total amount payable.

Are short-term loan repayments weekly or fortnightly?

They can be weekly, fortnightly, monthly or arranged around a payday, depending on the product and agreement.

Repayment frequency should be considered alongside the amount of each repayment and the total cost.

Is a smaller weekly repayment always cheaper?

No.

A smaller individual repayment does not necessarily mean the credit costs less overall. Weekly payments also occur more frequently.

Compare the total amount payable, applicable interest and fees, and the length of the agreement.

Can I change a repayment date?

Some providers may allow a repayment to be changed, delayed or split, but this depends on the terms and your circumstances.

Confirm any change with the provider before assuming the original repayment has been postponed.

What should I do if I cannot afford a repayment?

Contact the credit provider as early as possible and explain your circumstances.

Only agree to a changed repayment arrangement that you believe you can realistically afford.

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

Is MyPayNow a short-term loan?

We describe our product as a wage advance service rather than a conventional personal loan or payday loan.

Subject to eligibility and assessment, our service allows approved working Australian residents to access a portion of their net wage before payday and repay the balance on the scheduled repayment date.

Understand your repayment schedule before committing

Whether you are considering a short-term loan or another form of credit, understanding the repayment schedule before you agree can help you make a more informed decision.

Check when repayments fall, how much you will repay altogether and how much income you will have left after meeting your essential expenses.

It can also be worth considering whether a lower-cost or non-credit alternative may meet the same need.

If you are considering a wage advance with us, you can review how our wage advance works, our current costs and our repayment FAQs before deciding whether the product may be suitable for your circumstances.

Eligibility and assessment requirements apply. Consider the costs, repayment obligations and alternatives before requesting an advance.

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 the information is appropriate for you having regard to your objectives, financial situation and needs.