CHOICE membership

Payday loans: Why is usury permitted?


Choice should do an expose on payday loans. They currently claim they don’t charge interest. Instead they charge an establishment fee (20%) and a monthly service fee (4%).

That means per year you’d be paying around 68% interest. This is a usurious rate of interest.

Why isn’t someone doing something about it?

Payday loans in the news:


This is an exceedingly brief comment on the industry.

Did Choice write anything a bit more significant on the issue?


Hi @mc1, thanks for the comments. We’ve done a few articles over the years on ‘payday’ lending, including giving the entire industry a Shonky in 2015 and calling out Cash Converters for its lending practices. There’s more to do, and we appreciate the suggestions. If you have an experience or a story you’re willing to share, please feel free to leave a comment here.


The problem seems to have increased and got worst in recent years.

The article I linked back to mentioned the Shonky award in 2015.

From memory the law prohibits lending at over 25% interest… but leaves a loophole for amounts under $3000.

These payday lenders are trading in this area.

Lenders are also calling costs everything except “interest” in an effort to get around the legal definition of interest.

While this may be within the letter of the law surely it was never intended to permit such practises?

Usurous lending is unethical. We know it’s impacting the poorest hardest. Why don’t we do something to clean it up?



We’re all personally affected by the consequences of usurous lending practises: people living on the street, more poverty, crime, great demands on government services (higher taxes), etc…

Whether we realise it or not?

What happend to the “Common” in Commonwealth? Wasn’t it meant to include us all?



Payday lenders in the news again:

Payday lenders are asking applicants to share their myGov login details, as well as their internet banking password — posing a security risk, according to some experts.


One for a Shonky. There are Instant Cash Loan machines being placed in areas of NSW. You provide ID and Bank details and very quickly can be approved. Value of the loans are from $50 to $1,000 and users can increase their limits the more they access the machines. Users have between 1 to 3 months to pay the debt back. Ok my take on it is it is just Bad Bad Bad and Really Bad.

The article about this:


Thanks @grahroll, pretty Shonky stuff if you ask me!


I just saw this company advertising on TV last night and out of interest I googled them. I was horrified to learn of the fees they charge and the misleading way they state that they don’t charge interest…just fees of 4% per month though!!!
It was very hard to find an online loan repayment calculator, but I finally found the appropriate Payday loan calculator on the MoneySmart site. …so $1000 loan over 12 months costs $680 in fees and interest.
Surely these loan sites should have some sort of loan repayment calculator link on them…I couldn’t see one on this Sunshine one.
Wallet Wizard have their own dodgy repayment calculator, but no loan term is specified! I’m guessing it’s a year. They also indicate how much cheaper they are compared to others…but still charge 48% interest. They even have a default fee of $5 per day…" to cover reasonable costs of administering your account while
your account remains in default". So that default fee quickly adds up to $150 month.
I get nervous just being on the site…scared I might accidentally apply for a loan !! :fearful:


The Netflix “Dirty Money” documentary describes one US Payday lender in detail:

However it’s exactly the same model being used in Australia. If it’s illegal there… why isn’t it illegal here too?