Payday loans or Small Amount Loans are a quick way to get cash, especially for those without a good credit rating. For the vast majority of situations, they are absolutely horrendous, and should be completely avoided. The lure of getting cash as quickly as an hour after you apply should be considered in the sobering light of the interest rates or charges. Different loans have different conditions. Some promote that they have no fees, but charge an interest rate of up to 48%. Others do not charge interest, but have an account management fee equivalent to at least 48%. Why 48%? Because that is the maximum they are allowed to charge you. I’m sure it would be more if it were possible.
Debt consolidation loans are almost always financially treacherous. There are many fees and charges that are imposed, with little opportunity for your repayments to actually reduce your loan. Debt consolidation companies have been known to sign people into an act of bankruptcy, which can have profound effects on your financial health for many years.
Buy now Pay later options can also be fraught if you don’t pay them off in time. For example, Afterpay will charge a $10 late fee for a purchase over $40, then $7 if it remains unpaid the following week.
There are better alternatives. You could negotiate with your utility provider (electricity, gas, telephone) to give you a hardship plan that will allow you to pay in installments. In some situations, you may also be able to get some vouchers to pay some of the bill. You might be able to get an interest free loan through the University’s Financial Assistance Unit. If you are on a Centrelink payment you might be able to get an advance payment.
It may help you to budget on some regular expenses by paying a bit off every week, fortnight or month. There may also be ways to spend less money each week. For example, there are many services around the University that provides cheap or free food, medical services, and other similar types of services. Have a look at the SRC’s leaflet: Living on Little Money; or you can talk to an SRC caseworker about what options you might have. To make an appointment call 9660 5222.
Students' Representative Council, University of Sydney