Payday Loans Don't Exist

Oct 18 2016

PRESS RELEASE:   18 October 2016

The full press release including contact details and reference information is available in pdf format at the bottom of this page.




In Australia there is a small loan with big protections for consumers. It is one of the most highly regulated consumer loans available on the market. Almost a million Australian consumers successfully utilise this loan - yet it is wrongly labelled as a payday loan!

Payday loans DO NOT exist! What does is a SACC (Small Amount Credit Contract) or small loan – a government regulated product established in March 2013 with more than 6,000 pages of legislation and guidance for lenders.

The peak industry body for the small loans industry, the National Credit Providers Association (NCPA), wants consumers to be aware of their existing rights and protections when taking on a small loan.

Phil Johns, CEO of the NCPA, highlights the protections that come with small amount credit contracts. This small loan is the only consumer product on the market to have debt spiral cap, which means there is a maximum limit on what can be paid by a consumer.

“In Australia SACCs come with big protections for consumers. It’s actually the most highly government regulated, unsecured personal loan available and there are a number of reasons for this.

“For one, a SACC can only be provided by an ASIC licensed lender. By law, these licensed small loan lenders must also take precautions to make sure consumers can afford to repay their loan, including that the lender must consider 90 days of a consumers bank transactions to assess their cash flow.

“Even more checks and affordability analysis is mandated if a consumer requires more than two small loans in any 90 day period,” explains Mr Johns.

In addition to this is a government imposed protection given to borrowers receiving more than half their income from Centrelink and no more than 20% of their income can be committed to small loan repayments.

“This is why a SACC has the highest level of consumer protection of any personal loan on the market and why it’s the choice of credit for nearly one million Australians each year,” says Mr Johns.

SACCs are a small loan repaid between sixteen days and one year, up to $2,000 and protect consumers with set government fees and caps, including a debt spiral cap to give consumers ultimate protection.

A SACC is not a payday loan and the difference between the two concepts is significant. For a start, payday loans were made illegal in Australia in March 2013. Payday loans also had no limit on fees and charges and the maximum amount that could be borrowed. While SACCs limit establishment and monthly fees and have a limit on the amount that can be borrowed.

The table below makes the differences clear:



Payday Loan

Repaid on next pay day

Length of loan is dependent on consumer’s capacity to repay the loan.

Historically repaid on the consumer’s next payday.

Limit on fees and charges

Yes – establishment fee is capped at 20% and 4% per month

Most had no limits

Limit of maximum amount borrowed

Yes – no more than $2,000 can be borrowed

Most had no limits

Offered by ASIC licensed lenders only

Yes – only available through ASIC licensed lenders

No – anyone could call themselves a lender prior to 1st July 2010

Debt Spiral Cap

Yes – the most a consumer can ever be charged is double the amount of the original loan – including fees and interest

No – there were no safeguards in place to prevent debt spiral

Legal in Australia

Yes – SACCs are Government credit product

No – Payday loans were made illegal in Australia in 2013

NCPA is committed to educating Government, media, and the public on the facts about small loans. For more information about small loans and the wider industry, please visit 

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 The full press release including contact details and reference information is available in pdf format at the bottom of this page