Guaranteed Payday Loans No Matter What – Australia

Are you in need of some cash to tide you over until your next payday? Then, a payday loan might be a good idea for you. However, with a credit score that isn’t the highest or a hiccup or two in your credit history, this might not be very feasible.

 

Still, you can make use of the entities that give out guaranteed payday loans, no matter what your score is or what your credit history looks like. These lenders give you guaranteed payday loans, but there are some ins and outs you should be well-versed with, which is what we delve into in this article.

What Are Guaranteed Payday Loans?

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Payday loans are one type of guaranteed loans, which are possible with the virtue of a third-party guaranteeing the borrower. In other words, if the borrower fails to pay their debt (defaults), the third-party has to repay it on their behalf.

While the third-party could be a government agency or a private one. The agency purchases the debt value from the lender, and then they become responsible for the loan.

How Do Guaranteed Payday Loans Work?

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Typically, a loan would require the borrower to provide collateral to the lender to provide reassurance that the lender won’t lose their money, and with a payday loan, the collateral would be the borrower’s next paycheck. Either that, or credit union or prepaid card account and some lenders ask for access to the borrower’s bank account for debit funds.

For what risk is associated with them, be it on the lender or the borrower, payday loans usually have a cap of a couple of thousand dollars. Most of them range between $100 and $1,000, decided based on the amount of your next paycheck.

The gain that the lenders get from the whole agreement is that they impose rather high fees, which can reach triple the amount of APRs (Annual Percentage Rates). Not only that but the shorter the term of the loan, the higher the interest rate would be.

For example, with some one-week or two-week loans, the interest rate can be as high as 400% or even exceed that in the case of the borrower’s default. This is why some people might label payday loans or guaranteed loans as predatory, which we will talk about a bit later on.

What Are the Advantages of Guaranteed Payday Loans?

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Guaranteed payday loans are a little controversial, but they can be quite beneficial when it comes to tiding yourself over until the next paycheck when finances aren’t going very smoothly.

Sometimes, you need access to financing, obtaining necessary capital, getting a loan with flexible repayment terms, low down payments, or just quick and hassle-free access to cash, in which case a guaranteed payday loan would be perfect.

If you’re looking to pay some startup costs, buy some equipment, purchase real estate, increase capital, refinance some debt, or cover some professional fees, you’ll find that a guaranteed payday loan would be an ideal method to do so.

Are There Risks to Guaranteed Payday Loans?

With the facilitation that guaranteed payday loans offer, there are some risks associated with them. A 100% guaranteed approval on payday loans comes at a price, which is the interest rate charged and the fees.

For each $100 borrowed, you’ll be charged a fee ranging between $10 to $30. So for example, if you borrow $300 with a fee of the average ($20), your APR would exceed 400%!

Not to mention, there are major fees associated with rolling over the loan to another deadline or payday, which can reach up to $400 and above if you roll the loan over 9 times, for example.

This is why it’s very important to make sure that you’ll be able to pay the loan back as soon as possible, and that you can pay the borrowed amount with the fees and interest rate in the first place.

Signs of a Predatory Loan or an Entity Being a Loan Shark

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When it comes to taking out a loan, the first red flag is whether the lender checks your credit score or not. Someone’s credit score usually dictates the loan’s amount, interest rate, and some fees. So, if the lender doesn’t care about your credit score, they’re probably just looking to impose very high interest rates and betting that they’ll accumulate with the late payment fees.

Also, if the lender gives you vague answers regarding the fees and terms of the loan, it could be that they’re trying to mislead you about the information and get you to sign to terms that would benefit them from the accumulation of your defaulting fees and charges. This is especially true if they pressure you into accepting the terms hastily and don’t give you enough time to think.

Why Would Someone Choose a Guaranteed Payday Loan?

While we’ve mentioned that there are some serious risks and repercussions when it comes to payday loans, there are some benefits to them, and sometimes they’re the only viable option, especially for the following reasons:

Poor Credit Score

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To a lender, a bad credit score is a bad credit score, no matter what led to it, which can be a little frustrating.

According to Equifax, a bad credit score would be anything below 506, while anything below 550 would be a bad credit score in Experian’s terms. Finally, Illion is a little more forgiving, with 300 as the ceiling of a bad credit score. Anything above that would have room for improvement, which is a little vague, but leaves more room for discussion or negotiating loan terms.

Negative Credit History

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Some people have a negative credit history, while others don’t want to damage their credit score by the credit inquiries, and some don’t even have a credit history; all of which are viable reasons for not wanting to get your credit history checked.

Not to mention, people who have made several loan requests in a short duration might have troubles getting approval for their loans as those requests are quite alarming for the lending entity.

Who Can Apply for a Guaranteed Payday Loan?

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If you’re looking to get approval for your guaranteed payday loan, it would be easier than a simple loan, but there are some minimum requirements nonetheless, including:

  • To be a citizen of Australia or to have permanent residency there.
  • To be 18 years old or above.
  • To have a stable job with a guaranteed and regular income.

Of course, the definition of a stable job, guaranteed income, or regular income may vary, but you’ll simply have to prove that you’ve been getting a minimum amount of funds on a regular basis thanks to a job you do.

It’s important to note that some lenders ask for direct access to your bank account to be able to retrieve their money from the deposit of your next paycheck.

Final Thoughts

Sometimes, guaranteed payday loans can be a smart choice if you’re 100% certain that you’ll be able to pay them back in full on your next payday. However, if you aren’t, then their cost can pull you down into debilitating debt, so it’s important that you weigh the costs and risks against the benefits.

About the Author

Lucy has over a decade of experience in finance. She is currently the content curator here at Perfect Payday.

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