If you’ve been searching for small cash loans or fast cash loans, you may be curious as to how they work in practice. You might want to find out how much you can borrow, how the funds are given to you, and if all the scary stories about “super high” or “exorbitant” fees and interest rates on fast cash loans are fact or furphy.
As responsible lenders and a lender who likes to put the Fun back into funding, this blog post will answer all your questions about how fast cash loans work, what your rights are, what a lender’s obligations are to you, and all the other ins and outs of small cash or fast cash lending.
A fast cash loan is a type of small personal loan
To put it simply, a fast direct cash loan is a small personal loan. Though there is no strict definition of “small”, these loans range from about $500 to $5,000. These small personal loans also have shorter than usual loan terms. Smaller loans, from $500 to $2,000 may have loan terms as little as 91 days to six months; $2,000-$5,000 amounts may have loan terms of up to two years.
With any credit product, the smaller the amount and term, the higher the interest rates will be relative to other credit products. For example, home mortgages may have interest rates of 4%p.a. as they’re repaid over decades; large personal loans ($5,000 or more) may have interest rates of 10%p.a. since they have terms of five years (on average).
The longer the loan term you choose, the higher your interest will be, although your repayments will be lower. The shorter the term, the opposite is true.
To ensure you pay as little interest as possible, you should choose a loan term as short as possible while still being able to comfortably maintain (pay back) the loan.
Fast loan interest rates are capped by ASIC
The Australian Securities and Investments Commission, the statutory body that oversees credit licensing, has banned certain types of small loans to protect consumers such as high interest loans with very short terms (15 days or fewer). ASIC states that lenders, regardless of who they are, can only charge these fees on a loan up to $2,000 in value:
* a one-off establishment fee (of not more than 20% of the loan amount)
* a monthly account keeping fee (of not more than 4% of the loan amount)
* a government fee
* default fees or charges (the credit provider cannot collect more than 200% of the amount loaned if you miss a payment or fail to pay back the loan)
* enforcement expenses to recover any unpaid money.
For loans between $2,000 and $5,000, lenders may only charge a once-off establishment or handling fee capped at $400 and a maximum interest rate of 48%p.a. including all other fees and charges. If a lender is offering you terms that breach these caps, you need to contact an independent complaints body.
From application, to approval, to getting the funds
First, a lender like Fundo must see if you are eligible for a small immediate loan before you can proceed to the next stage (read more in our FAQs below.) Based on your information, if we believe you can pay back the loan on time and in full without getting into further financial strife, we will approve your loan application for the amount given. Using your banking details, we use PayID or Osko to have the funds transferred into your account within a minute or two. That’s how fast a fast loan can be!
FAQs
How do I know I’m eligible for a fast cash loan?
At Fundo, we have strict yet easy to follow eligibility criteria. Please read these before applying. To qualify, you must:
- be at least eighteen years old;
- be a citizen or resident of Australia for tax purposes;
- prove that you earn a minimum of $300 per week, excluding government benefits;
- ensure you can repay the loan as agreed; and,
- not be at risk of financial problems if you borrow from Fundo.
You can apply for a loan online at any time, from any location, with just three clicks! When approved, you’ll get the money into your account within 60 seconds.
I have bad credit. Can I apply for a fast cash loan?
Yes – we believe in a second chance at finance at Fundo. If you have bad credit, you may still be eligible to apply and receive a fast cash loan. We will ask you this as part of our due diligence to you and try to make alternative arrangements that suit your needs.
How do I know I’m dealing with a responsible lender?
The first aspect you should look for with any lending business is if they have an active ABN or ACN and an active Australian Credit Licence. These should be listed on their website or branded printed material they may share. Some lenders may also have an Australian Financial Services Licence. If you cannot verify a lender has an ACL, walk away immediately and report them to ASIC.
What can I use a fast cash loan for?
Ideally, you should use a fast cash loan to cover unexpected and unavoidable expenses that, if left unpaid, would severely impact your life in a harmful way. This may be for emergency car repairs so you can get to work on time; whitegoods or computer appliance replacement for your work or family; urgent travel to see or help relatives in need; unforeseen medical or dental bills; urgent home repair or accommodation costs; emergency rental bonds or securities – and that’s only a partial list. Ultimately, what you use the money for is your business, though we do advise you borrow only what you can afford to pay back comfortably.
