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Aussies rack up $18 billion of debt over Christmas
Debt is the last thing most Australians want to talk about, despite the country owing more than $18 billion in credit card and loan debt over Christmas alone.
What is a $1,200 payday loan?
A $1,200 payday loan is a high-cost personal loan that will give you a sum of $1,200 to be paid back over a specified period. In general, payday loans are worth small amounts and have short repayment periods. These loans are typically used for unexpected expenses such as medical bills or car repairs or emergency renovations.
What is a $1,200 bad credit payday loan?
A $1,200 bad credit payday loan is a quick loan available even to borrowers with bad credit. Unpaid debt or late payments can result in a bad credit score and make it difficult to borrow money from large banks or traditional lenders. Lenders that offer bad credit payday loans allow those with bad credit scores to apply and be approved for certain loans.
Who offers $1,200 payday loans?
A number of different online lenders offer $1,200 payday loans. These are usually smaller, lesser-known companies. To ensure you get the best payday loan for your needs, it’s best to compare several payday loan lenders.
How do you take out a $1,200 payday loan?
Generally, you take out a $1,200 payday loan by submitting an online application to your chosen lender. The lender will then review the application and either approve or deny your request. Most lenders provide an online form that is quick and easy to understand. Some lenders also allow you to apply at a physical office.
How long does it take to get a $1,200 payday loan?
Payday loans are designed for those who need money quickly, which is why some lenders allow you to collect your funds immediately in store. Other lenders deposit your loan amount into your chosen bank account, and you may see the money come through the same day as your loan was approved or within the next one or two business days.
What are the pros and cons of $1,200 payday loans?
All loans have positives and negatives. A $1,200 payday loan allows you to access funds quickly and easily and can cover immediate expenses.
However, $1,200 payday loans also have drawbacks. Payday loans tend to have high fees, which means you’ll have to 'buy' the loan for a high price. The terms, or fine print, of payday loans tend to be lender-favourable and may include additional fees and costs. Before taking out a $1,200 payday loan, you should be sure that you can make payments on time, or it could end up pushing you into a cycle of debt.
Alice needs to borrow $1,200 to pay for emergency car repairs. She chooses a loan term of three months. The lender charges an establishment fee of 20 per cent, or $240. The lender also charges a monthly fee of 4 per cent, or $144. As a result, Alice’s repayments work out to be $226.29 per fortnight and $1,584 in total.
Can you get a $1,200 payday loan if you're on Centrelink?
Yes, borrowers who receive Centrelink benefits can take out a $1,200 payday loan, under certain conditions. Some bad credit payday loans require that Centrelink is not your primary source of income, while other lenders invite anyone to apply.
Can self-employed people get $1,200 payday loans?
Self-employed borrowers can take out a $1,200 payday loan depending on the lender. Some lenders cater to those who are self-employed or own their own business, with some even offering payday loans for self-employed with bad credit.
What are some alternatives to $1,200 payday loans?
There are a number of alternatives to payday loans, including no-interest loans, Centrelink advances, negotiating with your provider, or low-interest credit cards. If you’re on low income, you may be eligible for the No Interest Loan Scheme, which is generally more affordable than payday loans. Borrowers receiving Centrelink benefits may qualify for advances on their payments. A low-interest credit card may charge a lower rate than most payday loans, making them a reasonable alternative.
A property and personal finance writer, Nick Bendel covers property, loans, credit cards, superannuation, and other bank products. Nick has previously written for The Adviser, Mortgage Business, Lifehacker, Business Insider, Yahoo Finance, and InvestorDaily, and loves getting elbow-deep in the latest ABS, APRA and RBA data.
In the best-case scenario, an application for a bad credit personal loan can be made within minutes and then be approved within 24 hours.
The worse your credit history, the harder you will find it to consolidate your debts, because lenders will be less willing to lend you money and will charge you higher interest rates.
However, people with bad credit histories can make debt consolidation work by following this three-step process. First, find a lender willing to give you a bad credit personal loan – this process will be simplified if you go through a mortgage broker or use a comparison website like RateCity. Second, make sure the interest repayments on your new loan are less than the repayments on the loans being replaced. Third, instead of spending those savings, use them to repay the new loan.
Some lenders are able to approve applications over the internet and within minutes. However, there is a catch. People who take out easy/instant loans generally pay higher interest rates and are restricted to lower amounts than people who follow a traditional borrowing process.
A bad credit personal loan is ‘secured’ when the borrower offers up an asset (such as a car or jewellery) as collateral or security. The lender can then seize the asset if the borrower fails to repay the loan.
In some instances, bad credit personal loans can help people with bad credit history to consolidate their debts in such a way that it makes it easier for them to repay those debts. This is because the borrower might be able to consolidate several debts with higher interest rates (such as credit card loans) into one single debt with a lower interest rate.
However, this strategy can backfire if the borrower spends the extra money instead of using it to repay the new loan. Another disadvantage of bad credit personal loans is that they have higher interest rates than regular personal loans.
Few, if any, lenders would be willing to give guaranteed approval for a bad credit personal loan. Borrowers with bad credit histories can have more complicated financial circumstances than other borrowers, so lenders will want time to study your application.
It’s all about risk. When someone applies for a personal loan, the lender evaluates how likely that borrower would be to repay the money. Lenders are more willing to give personal loans to borrowers with good credit than bad credit, because there’s a higher likelihood that the personal loan will be repaid.
So a borrower with good credit is more likely to have a loan approved and to get that approval faster, while a borrower with bad credit is less likely to have a loan approved and to get that approval slower.
A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.
Loan sizes usually range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.
It’s unusual for a lender to make a personal loan above $100,000, although there is no formal limit. As with all lending products, each lender sets its own policies, while each borrower is assessed on a case-by-case basis.
Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans – they also get loaned less money. Each lender has its own policies, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.
The Australian personal loans market contains dozens of lenders offering several hundred different products. Personal loans are available through a range of institutions, including:
- The big four banks (ANZ, Commonwealth Bank, NAB and Westpac)
- Smaller banks (such as Bank of Queensland, Bendigo Bank and MyState)
- Mutual banks (such as Heritage Bank, Greater Bank and Newcastle Permanent)
- Credit unions (such as People’s Choice Credit Union, BCU and Community First Credit Union)
- Non-bank lenders (such as Pepper Money, Liberty and RACV)
- Peer-to-peer marketplaces (such as Harmoney, SocietyOne and RateSetter)
There are three main ways to access personal loans. You can go through a comparison website, such as RateCity. You can use a finance broker. Or you can directly contact the lender.