29-Apr

All about fintech and Payday loans

How has the internet and tech changed the way we think about loans?

It’s difficult to remember, but not all that long ago anyone looking to take out a loan or open an account rarely looked beyond their own high street bank. There was little choice in the market and even products offered by competitor banks or building societies often seemed inaccessible.

Now, big banks are facing a major new challenge in the form of online alternative financial service providers, challenger banks and financial apps. These not only offer masses of choice, but they arm consumers with insight into their own finances and a level of control over their outgoings that they never had before.

More and more people are turning their backs on traditional banking altogether and have opened online-only accounts with new fintechs with a more appealing offering and brand. With a greater emphasis on cutting-edge tools and flexible options like pre-pay cards, these new accounts often offer consumers more control than traditional bank accounts ever did.

When it comes to borrowing, the same is true. Particularly with regards to short-term loans and payday loans, which are almost exclusively offered online. Gone of the days of seedy cheque-cashing shops. Now payday loans can be taken out proudly with significant caps on the costs to the consumer.

If I look for an online loan, will I have more choice?

If you are looking to take out a payday loan, you will certainly have more choice if you look online. Banks still rarely offer short-term loans as they are more risk-averse than new payday lenders. Direct lenders almost exclusively operate online and this means that applying is usually a quick and simple process.

Fintechs and lenders offering short-term funding to all kinds of borrowers should display everything you need to know on their websites. This means it should be easy to make an informed decision. So, once you’ve decided how much you would like to borrow, how long you need to pay it back and how much you can afford to pay in each instalment, you can search online to find lenders that suit your criteria before checking that you met theirs.

Are payday loans online as safe as bank loans?

Providing you borrow through a lender that is authorised, then, yes. Many people still prefer to bank and borrow with well-known high street banks, simply because it’s what is familiar and comfortable to them. That’s a valid reason to choose this path, but it cuts out an enormous and growing section of the market, which can sometimes be more competitive.

Is it easier to keep track of online loan costs?

It can be easier to keep track of the cost of your loan and your repayment schedule when you take out an online loan as the information about rates and terms is available at your fingertips. Some lenders may even make tools and apps available to borrowers to allow them to track their repayments and interest charges, for example – further reducing the risk of missing scheduled payments and being charged a penalty.

What’s better, an online loan or a bank loan?

There’s no hard and fast answer to that question, as it all depends on your individual circumstances and requirements. There are advantages and disadvantages of both online and bank loans to examine:

Advantages of online credit:

  • You may have a wider choice of providers
  • You can see terms and charges laid out clearly
  • There may be a wider choice of loan types
  • You may be offered more flexible repayments schedules
  • You may not have to meet quite so strict eligibility criteria
  • The application process can be quicker and easier
  • You may have the option to receive funding more quickly
  • It’s easier to shop around and compare loans for lower rates

Disadvantages of online credit:

  • Online lenders tend to be relatively new businesses without the reputation of high street banks
  • You may feel loyal to your bank
  • Your bank may have offered you a very good rate
  • You may struggle to find a lender who will offer enough money
  • You may not find a lender who will lend over a long-enough term
  • There is a risk that lenders could be unregulated
  • Some irresponsible online lenders may offer you loans that you can’t afford to repay

Does the internet make payday loan brokers obsolete?

Now that we can search the web for the exact types of loans we are looking for, using terms like ‘fast loans‘, ‘payday loans’, ‘quick loans‘ or ‘cheap personal loans’ for example, there are very few cases where using a broker would offer an advantage to a borrower.

Brokers are there to help you find a loan and a lender that is right for you. They often take your details and perform a number of credit searches on your behalf to find a good rate. However, this approach to damage your credit score, as every loan application you make, even if it is approved, can have a negative impact on your credit report and will stay on it for two years.

Brokers also charge a fee, either payable by you, as a borrower, or by the lender they recommend, which could call their impartiality into question. Getting the best rates is actually easy without the help of a broker, as online tools such as comparison sites, are there to help you work out the cost of borrowing, and they do this very accurately.

Providing you keep an open mind about the type of loan you want and the lenders you are willing to use, the internet is full of brilliant financial products for all kinds of borrowers, so get searching!

MyCashOnline offers straightforward, simple, quick personal loans in Australia. If you are really in need of quick cash for personal expenses, make an online application with My Cash Online today.



*Disclaimer & Example: For our Small Loans of $2,000 or less, an APR (Annual Percentage Rate) doesn't apply. These loans are fee-based only with a term between 62 and 180 days, and so the APR is 0%. The establishment fee is 20% of the amount borrowed and the monthly fee is 4% of the amount borrowed. Representative example: a loan of $1,000 repaid over 3 months equates to a total amount payable of $1,320 comprised of $1,000 principal (amount borrowed), $200 establishment fee and $120 in monthly fees. The maximum comparison rate on loans between $300 and $2000 is 199.43%.
For our Medium Loans between $2,100 and $5,000, with a term between 2 months and 12 months, the maximum Annual Percentage Rate (APR) is 48% (Comparison rate 65.6597% p.a.) and there is a $400 Establishment Fee. A Medium Loan of $3,000 borrowed over 1 year would equate to a total amount payable of $4,289 (including a $400 establishment fee).

Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR %). The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. The maximum comparison rate on loans between $300 and $2000 is 199.43%. This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

© 2022 Owned by Australian Synergy Finance Pty Ltd, ABN 54 613 655 646. Australian Credit Licence 490422. The information on this webpage is general information only and does not take into account your objectives, financial situation or needs.