Costs, Comparison Rates and 2026 Rules
Payday loan rules in Australia: SACC caps, medium amount loans and the 48% limit
How small amount credit contracts (20% plus 4% a month) and medium amount credit contracts (48% cap) work in Australia, the 2023 reforms, worked cost examples and cheaper alternatives.
In Australia a payday loan is legally a small amount credit contract (SACC): an unsecured loan of up to $2,000 repaid over 16 days to one year. The National Credit Code caps what a lender can charge on a SACC at a 20% establishment fee plus a 4% monthly fee on the amount borrowed, and if you default the total you can be asked to pay is capped at twice the amount borrowed. Loans of $2,001 to $5,000 over 16 days to two years are medium amount credit contracts (MACCs), which can carry an establishment fee of up to $400 plus costs capped at a 48% annual cost rate. Even within the caps, these loans are far more expensive than a standard personal loan, so check the alternatives below first.
This guide is part of the personal loan requirements and comparison rates overview. Examples are illustrative, using the maximum charges the law allows.
The categories at a glance
| Contract type | Amount | Term | Maximum charges | Who it applies to |
|---|---|---|---|---|
| Small amount credit contract (SACC) | Up to $2,000 | 16 days to 1 year | 20% establishment fee + 4% of the amount borrowed per month; default charges capped so the total does not exceed 2 × the amount borrowed | Non-bank lenders offering unsecured short-term loans |
| Medium amount credit contract (MACC) | $2,001 to $5,000 | 16 days to 2 years | Up to $400 establishment fee + annual cost rate capped at 48% | Non-bank lenders |
| Other regulated credit | Any | Any | Annual cost rate capped at 48% (National Credit Code s 32A) | Most lenders that are not authorised deposit-taking institutions |
| Loans from banks, credit unions and building societies (ADIs) | Any | Any | Not subject to the 48% cap | ADIs |
Short-term credit for 15 days or less is banned for amounts up to $2,000 (National Consumer Credit Protection Act 2009 s 133CA), and lenders cannot charge more than the permitted fees on a SACC. SACCs cannot be secured. Credit for 62 days or less is excluded from the Code if its fees are no more than 5% of the amount borrowed and its interest no more than the equivalent of 24% a year (National Credit Code s 6(1)), so check carefully what kind of contract a provider is offering.
What a SACC really costs — illustrative example
Borrow $1,000 over six months at the maximum charges:
- Establishment fee: $1,000 × 20% = $200
- Monthly fee: $1,000 × 4% × 6 months = $240
- Total repayable: $1,000 + $200 + $240 = $1,440, or $240 a month
The fees equal 44% of the amount borrowed for six months' use. Expressed as an annual rate on the falling balance, that is roughly 138% a year. Use the fee impact calculator to see the weight of fees for your own figures.
If you repay early, the lender cannot charge the monthly fee for months after the loan has been fully repaid.
What a MACC costs — illustrative example
Borrow $3,000 over 12 months at the maximum:
- Establishment fee up to $400
- Interest and other costs capped at a 48% annual cost rate: monthly repayment about $319.66, total repayments about $3,836
- Total cost including the $400 fee: about $4,236, or $1,236 for a year's use of $3,000
At an illustrative 12% personal loan rate with no fees, the same $3,000 over 12 months would cost about $3,199 in total, or around $199 in interest.
The 2023 reforms
The Financial Sector Reform Act 2022 made a set of changes to SACCs and consumer leases that took effect on 12 June 2023. Key changes include:
- Protected earnings for everyone. Previously, a cap on total SACC repayments applied only to borrowers who received at least half their income from Centrelink. The reformed rules extend a protected earnings limit to all SACC borrowers: your repayments on all your SACCs in a repayment period must not exceed 10% of your available income for that period, meaning your income after PAYG tax withholding (NCCP Act s 133CC and National Consumer Credit Protection Regulations 2010 reg 28LCA).
- Equal repayments. SACC repayments must generally be equal in amount and at equal intervals.
- No monthly fee after early payout. The monthly fee cannot be charged for months after a SACC is fully repaid.
- Unsolicited offers. Restrictions on lenders making unsolicited communications inviting people to apply for a SACC in certain circumstances, such as to former customers.
- Anti-avoidance. New anti-avoidance provisions target structures designed to avoid the credit rules, with penalties for breaches.
Lenders must still meet responsible lending obligations; see responsible lending. Before the reforms, a SACC was presumed unsuitable if the borrower was in default on another SACC or had two or more SACCs in the previous 90 days; for SACCs entered from 12 June 2023 that presumption was replaced by the protected earnings and other new rules. Repeat borrowing is still a warning sign a lender should weigh when assessing suitability.
Warning signs of unlawful lending
- Fees above the caps, or fees described as "membership", "brokerage" or "service" charges that look like extra loan costs
- A loan split into two contracts to avoid the caps
- A request for your bank login details or a direct debit authority you do not understand
- Pressure to borrow more or roll the loan over
- No Australian credit licence number in the credit guide
Check the lender's licence on ASIC's professional registers and report concerns to ASIC.
Cheaper alternatives to try first
| Option | What it is | Where to start |
|---|---|---|
| Centrelink advance payment | An advance on certain Centrelink payments, repaid from future payments without interest | Services Australia |
| No Interest Loan Scheme (NILS) | Community loans with no interest or fees for eligible people on lower incomes, for essential goods and services | Good Shepherd and local community providers |
| Payment plan with the biller | Many utilities, councils and telcos offer hardship or payment plans | Contact the biller directly |
| Hardship arrangement on existing debts | Ask your current lender to vary repayments | See hardship notices |
| Free financial counselling | Help with budgets, negotiations and options | National Debt Helpline, 1800 007 007 |
For larger amounts, compare a standard personal loan using the comparison rate guide and the fees guide.
Frequently asked questions
Is a 4% monthly fee the same as 48% a year?
Not quite. The 4% is charged on the original amount borrowed every month, even as you repay. Combined with the 20% establishment fee, the effective annual rate on the falling balance is much higher than 48%.
Can a payday lender take money straight from my account?
Only under a direct debit authority you have signed. You can contact your bank to cancel or stop a direct debit, but you still owe the debt, so talk to the lender or a financial counsellor about a repayment plan.
Do payday loans appear on my credit report?
Yes, they are consumer credit and can appear as accounts and enquiries. Many mainstream lenders view recent payday loans as a negative sign when you apply for other credit.
Does the 48% cap apply to bank personal loans?
No. Loans from authorised deposit-taking institutions are not subject to the s 32A cap, although their rates are usually far below it.
Sources and where to check
- ASIC Moneysmart — payday loans and alternatives
- ASIC — small amount credit contract guidance and the professional registers
- Federal Register of Legislation — National Credit Code and the Financial Sector Reform Act 2022
- Services Australia — advance payments
- Good Shepherd — No Interest Loan Scheme
- National Debt Helpline — 1800 007 007
