The truth about payday lenders.

Small Loans. Big Problem.
Australians shouldn't be turning to


in tough times.

There are big needs for people on low incomes or struggling to pay the bills—a high cost and predatory payday loan is not one of them.


Are you struggling to pay the bills? Speak to a free and independent financial counsellor on 1800 007 007 instead of turning to a payday loan

Payday lenders paint themselves as victims of “negative media”. They say they’re heavily regulated, but organisations like ours (Consumer Action Law Centre) and financial counsellors across the country help people struggling with payday loans on a daily basis.

“Small amount credit contracts” or “small loans” are industry terms, but we’ll continue to call high-cost credit that is secured by direct debits “payday loans”.

It’s not just us that calls these loans “payday loans”. The Federal Government’s financial literacy website, MoneySmart, does too.

The central problem with payday loans is that, where used other than as a one-off, they can make the financial situation of the borrower worse, not better. Although these loans are spruiked as a quick, easy, one-off solution to temporary problems, reliance and repeat borrowing is more common than the lenders would have us believe.

Payday loans are harmful because of a combination of five key factors:

  1. They are extremely expensive, compared to other forms of credit;
  2. Australians on low incomes or in financial stress are the main users;
  3. Payday loans are mostly used to pay for basic expenses like food, bills and car-related expenses;
  4. Payday loans usually get repaid before other essential expenses through direct debits; and
  5. The growth in online lending is making it quicker and easier to get the loans, without having to walk into a shop.

Get Help

If you’re struggling financially—don’t turn to a payday loan. Contact a free and independent financial counsellor on 1800 007 007.

You might be eligible for concessions or discounts on essentials that you’re not aware of. A financial counsellor can help you look at your options and won’t try to sell you a high cost and inappropriate option like a payday loan.

What can we do?

There are two ways to address this—through either addressing the broad issue of insufficient income of the people accessing these loans, or putting a limit on the excessive amounts of interest people are being charged.

In fact both will be necessary, while we have these products freely available.

A comprehensive cap on interest rates will allow Australians to access much safer products, without perpetuating the debt spiral.

Contact us

Speak to our policy experts by emailing campaigns(at) or calling 03 9670 5088.

If you’re struggling with payday loans please call 1800 007 007 to speak to a financial counsellor.