The Australian Payday Loan Cost Index
Key takeaways
- A payday loan is legally a Small Amount Credit Contract (SACC): up to $2,000, repaid over 16 days to 12 months, regulated under the National Consumer Credit Protection Act and overseen by ASIC.
- Payday loans do not charge interest. Fees are capped by law at a 20% establishment fee plus a 4% monthly fee on the amount borrowed, so the cost rises the longer the term runs.
- At the legal maximum, $1,000 over 6 months costs up to $440 in fees ($1,440 to repay); the same $1,000 stretched to 12 months can cost up to $680 in fees ($1,680 to repay), equal to 68% of the amount borrowed.
- Cheaper options usually exist: a Centrelink Advance Payment and a No Interest Loan (NILS) both charge $0 interest and $0 fees, versus up to $440 in fees on a $1,000 payday loan.
- These are legal maximums under the SACC caps, not a quote. The licensed lender who assesses you sets the actual fee within these caps, and this Index is free to cite with a link to perfectpayday.com.au.
Quick honesty note. Perfect Payday is not a lender. It’s a trading name of Tiny Ventures (ABN 52 168 226 480), Credit Representative No. 516845 — a free credit referral service and an AFCA member (see AFCA). When someone applies, we may pass their details to a panel of licensed lenders who assess the application and set any fee within the legal caps. We don’t make that decision. This page is a research reference, built from the published legal fee caps, so anyone can see what a payday loan can actually cost in Australia.
This page is free to cite and embed — please link back to perfectpayday.com.au.
The Australian Payday Loan Cost Index sets out, in plain figures, the most a payday loan can legally cost under Australia’s fee caps. Payday loans are legally Small Amount Credit Contracts (SACCs), and their fees are capped by law. Below we explain how the caps work, publish a full cost table of the legal maximums, and compare payday loans honestly against cheaper alternatives. Journalists, financial counsellors and community resource pages are welcome to cite and link to this Index.
How payday loans are priced in Australia (the legal caps)
A payday loan is the everyday name for a Small Amount Credit Contract (SACC) — a loan of up to $2,000, repaid over a term of 16 days to 12 months. SACCs are regulated under the National Consumer Credit Protection Act and overseen by ASIC, the corporate regulator.
Because these loans are small and short, lenders don’t charge a traditional interest rate. Instead, the law lets them charge capped fees:
- Establishment fee: up to 20% of the amount borrowed (a one-off).
- Monthly fee: up to 4% of the amount borrowed, for each month of the term.
- A small government fee may also apply, and default fees are capped if a repayment is missed.
These are legal maximums, not set prices. The licensed lender who assesses an application sets the actual fee within those caps. For the regulator’s own explanation, see ASIC’s Moneysmart guide to payday loans, and our payday loan fees explained guide for a fee-by-fee breakdown.
The Cost Index — the legal maximum cost of a SACC
The table below is the heart of this Index. Each figure is the most a SACC lender could charge under the caps above, calculated directly from them: the establishment fee is 20% of the amount borrowed, the monthly fees are 4% of the amount borrowed for every month of the term, and the maximum to repay is the amount borrowed plus those maximum fees.
| Amount | Term | Establishment (max 20%) | Monthly fees (max 4%/mo) | Max total fees | Max to repay | Cost as % of amount |
|---|---|---|---|---|---|---|
| $300 | 3 months | $60 | $36 (4% × 3) | $96 | $396 | 32% |
| $300 | 6 months | $60 | $72 (4% × 6) | $132 | $432 | 44% |
| $500 | 3 months | $100 | $60 (4% × 3) | $160 | $660 | 32% |
| $500 | 6 months | $100 | $120 (4% × 6) | $220 | $720 | 44% |
| $1,000 | 6 months | $200 | $240 (4% × 6) | $440 | $1,440 | 44% |
| $1,000 | 12 months | $200 | $480 (4% × 12) | $680 | $1,680 | 68% |
| $2,000 | 6 months | $400 | $480 (4% × 6) | $880 | $2,880 | 44% |
| $2,000 | 12 months | $400 | $960 (4% × 12) | $1,360 | $3,360 | 68% |
Illustrative legal maximums under the SACC caps — NOT a quote; the licensed lender who assesses you sets the actual fee within these caps.
The clearest pattern in the data is that term drives cost. Because the monthly fee applies every month, the same $1,000 costs up to $440 over 6 months but up to $680 over 12 months — a jump from 44% to 68% of the amount borrowed. To model your own figures, try the payday loan cost calculator, or use the free calculator on ASIC Moneysmart.
The protected-earnings rule (this one protects you): by law a lender generally can’t sign you up to a SACC if your total SACC repayments would exceed 10% of your net income. If a lender ignores that rule, it’s a warning sign, and grounds for a complaint to AFCA.
Payday loans vs the cheaper alternatives
A payday loan is rarely the cheapest way to cover a shortfall. The table below compares the cost of borrowing $1,000 across the common options, so the trade-offs are clear before you decide.
| Option | Typical cost on $1,000 | Repayment | Key catch |
|---|---|---|---|
| Payday loan / SACC | Up to $440 in fees over 6 months (legal max) | Regular instalments over 16 days–12 months | Highest cost here; easy to roll into repeat borrowing |
| Centrelink Advance Payment | $0 — no interest, no fees | Repaid from your future Centrelink payments | Only for eligible payment recipients; reduces later payments |
| No Interest Loan (NILS) | $0 — no interest, no fees | Repayments of what you borrowed, up to $2,000 | For essentials; eligibility criteria and a short wait can apply |
| Wage-advance / earned-wage-access apps | Often a flat | Repaid from your next pay | Some sit outside NCCP credit regulation, so protections can differ |
For eligible payments, a Centrelink Advance Payment is interest-free — see Services Australia. A No Interest Loan (NILS) via Good Shepherd charges no interest or fees on up to $2,000; find one through the NILS locator. To compare options side by side, ASIC’s Moneysmart is a neutral starting point, and our alternatives to payday loans guide covers each in more depth.
Why this matters — the demand picture
The reason a cost index like this is worth publishing is that demand for small, short-term credit tends to rise exactly when households can least afford expensive borrowing. We keep the following context general and attributed, rather than quoting precise figures, because the underlying data moves.
- Personal insolvencies have been reported as rising in recent years, according to data published by the Australian Financial Security Authority (AFSA).
- Cost-of-living pressure has weighed most heavily on lower-income households, as reflected in the Australian Bureau of Statistics (ABS) Selected Living Cost Indexes.
- Payday debt is frequently reported by financial counsellors as among the most stress-inducing forms of debt, in part because the cost is high relative to the small amounts involved.
For anyone already feeling that pressure, free help exists before new debt is taken on — which is the point of the next section.
Before you borrow
- Centrelink Advance Payment — interest-free. If you’re on eligible payments, you can bring part of a future payment forward and repay only what you took. See Services Australia.
- No Interest Loan (NILS) — no interest, no fees. Up to $2,000 for essentials via Good Shepherd. Call 13 NILS (13 6457) or visit the NILS locator.
- National Debt Helpline — 1800 007 007. Free, confidential financial counsellors (not salespeople) who can help you find options you might have missed. More at ndh.org.au.
- Talk to who you owe. Many utilities and councils offer hardship plans that beat taking on new debt.
If a small short-term loan still turns out to be the right fit, our main payday loans page explains how the process works, and our pages on Centrelink loans and payday advance cover specific situations.
About this Index — methodology and citation
The Australian Payday Loan Cost Index is built entirely from the published SACC fee caps set out in the National Consumer Credit Protection Act and explained by ASIC on Moneysmart. Every figure in the cost table is the legal maximum, calculated as a 20% establishment fee plus a 4% monthly fee applied across the full term — no lender quotes or estimates are used. The Index is reviewed quarterly against current ASIC guidance and updated whenever the caps change. It is compiled and reviewed by Lucy Adams, and it is free to cite, quote and embed with a link back to perfectpayday.com.au.