Frequently Asked Questions

What makes a payday lender or micro lender different to a bank? If I can get a credit card why would I use a payday or microloan? I heard that payday and microloans have really high interest rates, is this the case? Do payday lenders and microlenders only loan money for emergencies? How do I know whether or not I am eligible for a payday or microloan? What makes a payday lender or micro lender different to a bank? Payday lenders and microlenders provide “right sized” loans specific to customer needs in contrast to most mainstream lenders and banks that only offer credit cards or a minimum loan amount of $3000, sometimes thousands of dollars more than customers want or need. Our customers come to us because they want to borrow only what they need and know the total cost of the loan with a set repayment plan so they can effectively manage their budget. NFSF members can often approve a loan for a customer within a matter of hours following an assessment of their financials and ability to repay making them a quick and convenient credit option. » Back To Questions If I can get a credit card why would I use a payday or microloan? Our customers sometimes do have credit cards but choose to use a microloan or payday loan as a cost-effective short-term credit option instead of or in addition to their credit card. Some customers find the advantage of a microloan or payday loan over a line of credit is that they can budget more effectively to service a set amount over a set term and avoid spiralling debt. NFSF members offer a range of financial products that most major lenders don’t. Our customers find the flexibility of these options useful in choosing the right solution for their financial needs. » Back To Questions I heard that payday and microloans have really high interest rates, is this the case? It is confusing and misleading to apply an annual interest rate to a loan over a period of only a few weeks or months. 48%pa (daily reducing) is the current interest rate cap applicable to payday and microlenders. When translated into a weekly rate this is actually less than 1% - only 0.92%. It is important to understand the interest charged on a $100 loan with a daily reducing interest rate of 48% pa is not $48 in $100 – over a two week period it is a total interest amount of just $1.85. This is why all NFSF members provide total cost of credit information, including all interest and associated fees, in clear dollar amounts before issuing any loan. » Back To Questions Do payday lenders and microlenders only loan money for emergencies? In some instances our members are lending to help customers deal with an emergency or unexpected situation. However we are a customer service oriented industry so have a range of financial products tailored to meet a variety of needs. The most common reasons customers give for requesting a micro-loan or payday loan are: Car registration and insurance Urgent car repairs Rental bond Fridge/washing machine replacement or repair Unexpected travel for funerals Funeral and medical costs Dental expenses To avoid bank and credit card fees Multiple utility bills coinciding Traffic/parking fines and legal expenses How our customers use their money is their business. Our commitment is to ensure we only lend to customers in a position to repay their loan and that they understand the complete cost of the credit. » Back To Questions How do I know whether or not I am eligible for a payday or microloan? Before providing a loan our members will step you through a stringent set of checks and lending criteria. Bank records are assessed to confirm you can afford the loan in addition to verifying your employment and other relevant details to confirm your financial competency. Working out a budget [link] to determine your disposable income is a good way to track your expenses and determine what you can realistically afford to borrow and successfully repay. Microlenders and payday lenders lend their own capital and this is often unsecured. They therefore have a vested interest in lending only to customers who are able to successfully complete their loan. » Back To Questions