If you’ve been searching for short term loans in Australia, you’ve probably noticed the results are all over the place. Some pages are talking about $500 payday products. Others are quoting rates from major banks.
Here’s the thing: a lot of people use “short term loan” to mean very different things. A personal loan with a 2-year term, a payday-style cash advance, and a structured finance product for a specific purchase are all called short term loans but they work very differently, and the cost difference is significant.
This guide explains what short term loans in Australia actually look like, what they cost, and why going through a broker often gets you a better deal than applying direct.
What Is a Short Term Loan in Australia?
The term “short term loan” covers a wide range of products. At one end, you’ve got small amount credit contracts (SACCs), sometimes called payday loans, which allow you to borrow up to $2,000 and repay within 16 days to a year. At the other end, you’ve got personal loans from $5,000 to $75,000 with terms of one to five years.
Yes Loans works with personal loans, not small amount or payday products. If you need less than $5,000 quickly, our referral partner MoneyBuddy may be a better fit. For everything above that, we compare options across our panel of lenders to find a structure that works for you.
How Do Short Term Personal Loans Work?
A short term personal loan is a lump sum you borrow and repay over a set period, usually one to five years, with interest charged on the outstanding balance. Most come with either a fixed or variable rate.
Loans can also be secured or unsecured:
- Fixed rate: Your repayments stay the same throughout the loan term.
- Variable rate: Your repayments can move with the market.
- Secured: Backed by an asset (like a car), usually means a lower interest rate.
- Unsecured: No asset required, but typically attracts a higher rate.
Here’s how the two main product types compare:
| Feature | Short Term Personal Loan | Payday / SACC Loan |
|---|---|---|
| Typical amount | $5,000 to $75,000 | Up to $2,000 |
| Loan term | 1 to 5 years | 16 days to 12 months |
| Interest charged? | Yes | No (but fees apply) |
| Typical cost | 6% to 20%+ p.a. | Up to 20% establishment + 4% per month in fees |
| Suited to | Planned purchases, debt consolidation | Emergency cash shortfall |
| Assessed by | Credit score, income, expenses | Usually bank statements |
What Does a Short Term Loan Cost in Australia?
This is where a lot of borrowers get caught out. The advertised rate isn’t always the rate you’ll get. Most lenders use risk-based pricing, so your actual rate depends on your credit score, income, and the strength of your application.
Unsecured personal loan rates in Australia currently average around 10.32% per annum, with well-qualified borrowers finding rates from around 6%. Borrowers with imperfect credit can pay 15% to 20% or more. On a $15,000 personal loan over 3 years, the difference between a 7% and a 14% rate is roughly $80 a month and over $2,800 across the life of the loan.
For payday-style short term loans, the Australian Government caps fees at:
- A one-off establishment fee of up to 20% of the amount borrowed
- A monthly account-keeping fee of up to 4% of the amount borrowed
ASIC’s MoneySmart puts this in plain terms: on a $1,200 payday loan over one year, you’d repay $2,016, which is $816 in fees alone.
Always compare the comparison rate, not just the advertised rate. The comparison rate rolls in interest and most standard fees to give you a truer picture of what you’ll actually pay. Use the Yes Loans loan calculator to run your own numbers before you apply.
What Can You Use a Short Term Loan For?
Short term personal loans in Australia can cover a wide range of needs. The most common uses we see are:
- Unexpected bills or medical expenses
- Travel or holidays
- Home repairs or improvements
- Debt consolidation (combining multiple debts into one payment)
- Major purchases like furniture or electronics
For home improvement loans and medical loans, personal finance through a broker is often more competitive than carrying a credit card balance at 20% or higher. For debt consolidation loan, rolling multiple debts into one personal loan can reduce both your monthly repayments and total interest paid.
Worth knowing: if your borrowing need is vehicle-related, a structured car loan is usually a better option than a personal loan. Car finance is secured against the vehicle, which typically means a lower rate.
How to Get the Best Short Term Loan in Australia
Here are four steps to put yourself in the best position before you apply:
- Check your credit score first. You can do this for free through a credit bureau. Errors on your file are more common than people think, and fixing them before you apply can make a real difference to your rate.
- Focus on the comparison rate, not the headline rate. The comparison rate reflects the true cost of the loan including fees.
- Don’t apply everywhere at once. Multiple credit applications in a short window can drag down your score. A broker submits to the most likely match first, which protects your file.
- Get your documents ready. Most lenders want recent payslips, bank statements and ID. Having these on hand speeds the process up considerably.
Working with a broker means your application goes to the lender most likely to approve it at a competitive rate. At Yes Loans, we work across a panel that includes Angle Finance, Latitude Financial, Sovereign Credit, Pepper Money, Money3, and Allied Credit. That panel diversity is what lets us keep looking for a yes when one door closes.
Will a short term loan affect my credit score?
Applying for credit creates an enquiry on your file, which can have a small short-term impact on your score. Repaying a loan on time, however, can improve your score over the loan term.
Running your options through a broker before formally applying keeps your enquiry count down.
Short Term Loans Online: What to Watch Out For
Applying for short term loans online in Australia is faster than ever, with some lenders offering outcomes within hours. But speed can come at a cost, and not all online lenders offer the same value.
Watch out for:
- Fees not obvious in the headline rate
- Early repayment penalties if you want to pay out the loan ahead of schedule
- Loan terms longer than what you actually need (which increases total interest, even if the monthly repayment feels comfortable)
What we see in practice is that borrowers who take 20 minutes to compare options before applying save a lot more than 20 minutes’ worth of money.
What’s the difference between a secured and unsecured short term loan?
A secured loan is backed by an asset (most commonly a vehicle), which reduces the lender’s risk and typically results in a lower interest rate. An unsecured loan doesn’t require security but usually attracts a higher rate.
If you’re borrowing for a specific purchase with an asset attached, secured finance is usually worth exploring first.
Can I get a short term loan with bad credit in Australia?
Yes, depending on the lender. Banks tend to have stricter credit criteria, but specialist non-bank lenders on our panel assess applications differently.
If you’ve been knocked back elsewhere, that doesn’t automatically rule you out. Chat to our team and we’ll give you an honest read on your options.
Key Takeaways
- Short term loans in Australia range from small payday-style products (up to $2,000) to personal loans of $5,000 to $75,000 with 1 to 5 year terms. They’re not the same product.
- Rates on personal loans vary significantly based on your credit profile. Average rates sit around 10% for unsecured loans, with well-qualified borrowers finding deals from 6%.
- Always compare the comparison rate, not just the advertised rate.
- Payday loan fees are capped by law (20% establishment + 4% monthly) but can still make these products very expensive.
- Using a broker protects your credit file and gives you access to a range of lenders through a single application.
- For amounts under $5,000, our referral partner MoneyBuddy may be able to help.
Ready to explore your personal loan options? Chat to our team on (08) 9472 3000 or apply online. We work harder to say yes more often, and we’ll take the hard work out of finding the right deal for your situation.
