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Guide To Payday Loans

Aug 29, 2023


3 minutes

Guide To Payday Loans

Payday loans are short-term, small cash loans for when you just need a little bit extra.

They’re ideal for when you’re stuck between paychecks and require just a small amount of money to tide you over until next payday.

Payday loans can help with rent, bills, or even just getting some extra spending money.

Keep reading to learn about:

  • why payday loans have had a bad reputation
  • why a payday loan might be a good solution for you
  • the difference between high-cost and low-cost lenders
  • getting a loan with bad credit
  • how much you can borrow with a payday loan

Why do payday loans have a bad reputation?

Let’s be honest: payday loans often get a bad rap.

This is because payday lenders have a reputation of exploiting people in vulnerable financial situations.

In the past, predatory lenders have lent money to people who can‘t pay back the loan, charging up to 400% of the original loan amount in interest and fees.

One example reported in 2018 showed an Auckland man paying $40,000 over four years to clear a loan of just $900. This was due to the lender’s extremely high interest rates and penalties, which kept the man in a vicious cycle of debt.

Recent New Zealand law changes have tried to curb this behaviour by capping the amount of interest and fees at no more than 100% of the original loan amount.

If this law was in place at the time he took out the loan, the most he would have had to repay would have been $1,800.

This is better, but there are still high-cost lenders out there who charge high interest rates.

A high-cost lender is defined as charging more than 50% interest per year.

Many payday lenders get around this by charging 49.5% interest rates.

Sweet As Money does things differently: we genuinely care about our customers and believe there is a need for people to access low-cost payday loans.

Our interest rate of 35.5% is low compared to other payday lenders, ensuring people can access affordable loans that help them achieve their goals.

Why choose a payday lender?

A payday loan is different from other loan types because of its short term length.

A typical payday loan is for a period of a few weeks - enough to get you through to your next pay.

Other personal loans - like one from a bank or finance company - often have minimum terms of six months.

Sweet As Money offers loans with a minimum term of just 2 weeks.

This is a great option if you know you have money coming in soon, but just need a small loan to cover you until then.

There’s no need to take out a six month loan when you know you’ll pay it back in a few weeks.

Can I get a payday loan if I have bad credit?

If you have bad credit, you still may be able to get a loan.

The most important thing is affordability: if you earn enough income to afford the loan repayments, you are more likely to succeed in getting a loan.

This is true even if you had bad credit history.

At Sweet As Money, we believe people with bad credit should be given the chance to improve their credit score.

That’s why we subscribe to positive credit reporting. This means that when you regularly make loan repayments with us on time and in full, your credit score gets a boost.

The more times you do that, the better your credit score gets.

So, if you have a bad credit history but earn enough income to afford the loan repayments, you put yourself in a better position to get a loan approved.

Can I get a loan with no credit check?

If you have bad credit history, you may be searching for “no credit check” or “bad credit” loans.

It may be tempting to hide your credit history from a potential lender, but there’s really no need to do this.

Any responsible lender will do a credit check to learn about your financial history.

That doesn’t count you out from getting a loan: as long as you can afford the loan repayments, you might still be able to borrow money.

Need a small loan for a short period of time? Sweet As! Apply online and we'll be in touch today.

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Sweet As Money provides loans for a minimum period of 14 days and a maximum period of 90 days. A loan of $1,000 taken over 90 days at 0.096% per day, incurs a total of $171.30 in fees and interest, for a total repayment amount of $1,171.30. This equates to 13 weekly repayments of approximately $90.17. Sweet As Money lends at an Annual Interest Rate (AIR) of 35%.

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