Short TERM Loans PDF

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SHORT TERM LOANS Short term loan, sometimes referred to as a payday loan, is the expensive form of credit provided by entities to finance debtor’s needs temporarily. This quick-fix technique may be used to bridge cash outflows when you are waiting for a payment to arrive. According to a study 4.7 million individual payday loans had been written between April 2016 and July 2019 (Consumer Action Law Centre, 2020). Most lenders provide a short term loan of up to $2,000 with a payback period between 16 days to 365 days. According to a regulation introduced in 2013, entities lending $2000 or under with the payback period of under 12 months can charge a maximum of 20% of the amount as the establishment fees and 4% interest monthly (Loans and credit cards | ASIC Australian Securities and Investments Commission, 2020). Despite, personal loan and credit card providers may not always provide their service to clients with bad credit history, there is a good chance of payday loan being approved. Majority of the creditors have certain conditions in common such as, the applicant must be above 18 years old and should have an income source to repay the loan whereas some entities such as Sunshine Loans do not allow income source to be Centrelink or Government benefits only (Sunshine Loans, 2020). Most organisations require payslips, bank details, any proof of ID, and a utility bill to be attached with the request. The process may take as few as 30 minutes to be approved. Applicants may receive the money on the same day as the approval if they bank with one of the Big Four and have applied for payday loans from authorized lenders like Cash Train (Barry, 2020).

Name

SHORT TERM LOANS Max Loan Arrears Amount Fees $2,000

$5,000

(Corke, 2020)

$35

$35

$2,000

$10

$2,000

$35

Costs 20% of loan amount + 4% of loan amount each month Up to $2,000 - 20% establishment fee + 4% monthly. Above $2,000 - $400 + from 8.7% to 48% APR 20% of loan amount establishment fee + 4% of loan amount monthly Establishment fee from 20% of loan amount + monthly fee from 4%

Lenders usually require recurring payments against the loan, any late instalment may have a fee associated as well. Any defaults or fails to pay back the loan may result in a negative impact on the client’s credit history. This may create a negative impression on any potential creditors for as long as five years. Typically, no asset is kept as security in payday loans and may lead to legal proceedings in case of failure of repayments. This swift way of improving cashflows is used as a remedy for unforeseen financial emergencies. However, there is a huge cost associated with it and may not solve the problem every time.

Consumer Action Law Centre, 2020. THE DEBT TRAP. How payday lending is costing Australians. [online] p.4. Available at: [Accessed 22 April 2020]. Asic.gov.au. 2020. Loans And Credit Cards | ASIC - Australian Securities And Investments Commission. [online] Available at: [Accessed 22 April 2020]. Sunshine Loans, 2020. Frequently Asked Questions On Express Loans | Sunshine Loans. [online] Sunshine Loans. Available at: [Accessed 22 April 2020]. Barry, E., 2020. Need A Short Term Loan? 5+ Lenders That Could Help | Finder. [online] finder.com.au. Available at: [Accessed 22 April 2020]. Corke, M., 2020. Compare Short Term Payday Loans Up To $2,000 And Apply Online | Finder. [online] finder.com.au. Available at: [Accessed 22 April 2020]....