Payday Loans and SACCs: Why They Cost So Much
ADS Team
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August 13, 2026
3 months ago
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In short: A Small Amount Credit Contract - commonly called a payday loan - is capped by law at a 20% establishment fee plus 4% monthly. That sounds modest until it is annualised: a $1,000 loan over four months costs $360 in fees, equivalent to well over 100% a year. There are cheaper options that most borrowers do not know exist.
Key takeaways
- Fees are capped at 20% establishment plus 4% per month, not expressed as an interest rate.
- Repayments cannot exceed 10% of net income for consumers receiving Centrelink payments.
- No Interest Loan Schemes provide up to $2,000 for essentials at genuinely zero cost.
- Utility hardship programs can defer bills without any borrowing at all.
What it actually costs
On a $1,000 SACC over four months:
| Component | Amount |
|---|---|
| Establishment fee (20%) | $200 |
| Monthly fee (4% x 4) | $160 |
| Total repaid | $1,360 |
| Effective annualised cost | Well over 100% |
The fees are legal and capped. The structure simply is expensive.
The cheaper alternatives
- No Interest Loan Scheme (NILS) - up to $2,000 for essentials like appliances, car repairs and medical costs. No interest, no fees.
- StepUP loans - larger amounts at low interest for eligible borrowers.
- Utility hardship programs - energy and water retailers must offer them, and they can defer or reduce bills without borrowing.
- Centrelink advance payments - an advance on your own payment, repaid from future payments at no cost.
- A free financial counsellor on 1800 007 007, who can negotiate with creditors directly.
Protections that apply
- Fees are capped as above.
- For borrowers receiving more than half their income from Centrelink, repayments cannot exceed 10% of net income.
- Lenders must obtain and review 90 days of bank statements.
- Repeat borrowing triggers a presumption of unsuitability.
Frequently asked questions
Do payday loans affect my credit file?
Yes. The enquiry appears, and lenders reviewing your statements treat SACC use as a significant negative signal - it is one of the fastest ways to complicate a future mortgage application.
What if I cannot repay one?
Contact the lender for hardship immediately, and call the National Debt Helpline on 1800 007 007. It is free, independent, and counsellors negotiate with these lenders routinely.
Are consumer leases the same thing?
They are different but often more expensive overall. Renting an appliance can cost several times its retail price across the term - compare the total payable against simply buying it.
Related reading
- Debt Consolidation Loans: When They Work
- Financial Hardship: Your Rights Before You Miss a Payment
- Secured vs Unsecured Business Loans: Which Should You Take?
Sources
- Payday loans and small amount credit contracts — ASIC Moneysmart
- No Interest Loans (NILS) — Good Shepherd
- National Credit Code - SACC provisions — Federal Register of Legislation
Information current as at 2 September 2026.
General advice warning: This article contains general information only. It does not take into account your objectives, financial situation or needs, and it is not personal credit or financial advice. Consider whether it is appropriate for you and seek advice from a licensed credit representative before acting.
Any interest rate shown is an example only and is not an offer of credit. Where a rate is quoted, the applicable comparison rate is available from the relevant lender and should be considered alongside it.
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