It’s normal that once in your life, you may have experienced an unexpected shortfall of cash whether you’re covering bills or need some cash due to an emergency crisis. Most people turn to payday loans, a type of cash loan wherein if you need a small amount of quick cash, you may be able to get it.
Cash Loan Explained
There are many ways to borrow money and one of those is a short term cash loan. A short term loan is typically repaid over months while there are many personal loans that are repaid over years. These types of lending loans are regulated by a lender and you need to be knowledgeable with the details of any cash loans you are considering in case something wrong happens.
Short term loan is also called as a payday loan, payday advance or cash advance, but today these terms are now being used less by lenders and consumers. In Australia, “payday loans” carry a negative connotation for a time because very little regulation of small amount loans and loan periods were sometimes just a week or two- until the customer’s next “payday.” Good news is, it is now illegal in Australia to provide a loan of fewer than 16 days and many lenders have extended the loan repayment period to several months.
This kind of loan is widely managed in Australia and has implemented a SACC (Small Amount Credit Contract) is used to describe loans that are $2,000 or less and are to be repaid between 16 days and 12 months. But there are limitations in regards to the allowed maximum establishment fees and monthly fees for SACC loans.
Short term loan is also the same as any loan. There are certain penalty fees that you have to pay in case you do miss repayments when borrowing. It’s important to check the repayment conditions and schedule before taking out any loan so you can manage well your financial responsibilities.
Credit Checks on Short Term Loans
Lenders in Australia adhere to the commitment of “Responsible Lending”. There are lenders who do credit checks before they let you borrow an amount but other short term lenders don’t. Some lenders choose not to check your credit rating, instead, they focus more on your employment, income, expenses, and other loans and cash flow you have on your credit history. With the help of advanced technology, there are other means like data points and complex algorithms that determine your ability to repay a loan and your disposition to do so.
Having a poor credit history may be a disadvantage somehow to other lenders. If you worry that a credit check needs to be performed for a small loan, then you might want to ask your lender first if they conduct a credit check before applying.
Australia has been making a big move in the recent years to help people understand more the information in their credit file and have easy access to it. You can do a quick google search and find information for options in requesting your credit file and learn more about it and even how to access a credit score. There are different ways your credit score can be calculated depending on the credit bureaus.
Although there are many benefits why you should choose a payday loan than other loans, you have to make sure that you can pay by the end of the period. If you ever default on your loan repayments and don’t repay the loan, your lender may likely to report it to a credit bureau. Having this reputation can remain in your credit file for 5 to 7 years and you might have the difficulty to apply for other types of loans.
Author bio: Ivandrea Ollero is a daytime writer for Quick Cash, a cash loan and instant decision loans lender in Australia. Ivandrea writes to provide information for successful cash loans and payday loans to help people over a difficult patch. She graduated from St. Scholastica’s College Manila, Philippines with a Bachelor’s Degree in Mass Communication minor in Broadcast Journalism.