Since 2013, Payday Loans have been banned. In Australia we have small loans which are highly regulated by the Government, can only be provided by ASIC licensed lenders and have the highest level of consumer protection of any personal loan on the Australian market today. This is known as a Small Amount Credit Contract (SACC).What is a small or SACC loan?
- A loan with a term from 16 days up until a year.
- Maximum loan amount of $2,000 and with capped fees.
- Repayment fees are capped at a maximum amount of 20% for an establishment fee and 4% per month.
- Nearly 1 million Australians each year choose to take out this type of credit. 64.5% of these customer’s main source of income is from employment.
- A small loan has thousands of pages of government legislation for the protection of consumers. Lenders have nearly more than double that amount of additional pages of conditions, acts, regulations, compliance and guidance to follow to maintain their license as a lender.
- SACC loans are the only loan product in Australia with a debt spiral cap to protect customers. The most amount a customer can ever repay on the loan is double the original loan amount.
- Lenders need to go to great lengths to ensure the customer can afford to repay the loan. The law requires the lender to consider 90 days of bank transactions to assess the customer’s cash flow and establish loan suitability.
- Further checks and affordability checks are required if a customer needs more than two loans in a 90 day period.
- If a customer’s income is derived from more than 50% of government benefits, then the maximum commitment to repayments for SACC loans is 20% of their total income.
By taking out a small loan, you can be assured you are choosing the loan product with the biggest Australian consumer protections today.
Watch the video to learn more!