Payday loans are fast cash loans, ideal for an emergency situation when there just doesn't seem to be enough cash in your pocket. Find out more basic facts and commonly asked questions right here...


What is a Payday Loan?

A payday loan is a short-term loan, designed to cover you until your next pay day. Here are some of the main features of payday loans:

  • Sometimes known as 'payday advance' or 'fast cash loan'
  • Short term loan
  • Repayment is usually within 2 weeks to 30 days
  • No excellent credit history required
  • No large income required
  • Often no credit checks
  • Usually instant approval
  • Cash received quickly (often within 24 hours into your bank account)

Who Can Apply for a Payday Loan?

Here is one of the main advantages of payday loans: almost anyone can apply and get an approval for one. As short-term instant cash loans, they do not require an excellent credit record or high income in fact, many payday lenders do not even carry out credit checks.

So, even if you have been turned down for a loan from the mainstream bank or have problems with your credit rating, you are still in with a very good chance of getting a payday loan.

Payday loans are great for emergency situations such as an unexpected doctor's bill or repair in the home. Most payday lenders will offer their loans online via a quick and easy application and approval process.

Generally, there will be some basic requirements to get a payday loan. These usually include:

  • Be at least 18 years of age
  • Be a full New Zealand citizen
  • Be employed / have regular income to your bank account
  • Have a working bank account

The requirements often vary according to each lender so it is essential to find out exactly what you will need in order to get the loan. This can save a lot of hassle or even disappointment.

Will my Credit Score be Affected?

As with any loan, your credit score or rating could be affected by taking a payday loan. No matter what type of loan you apply for or take, a note of it will be made in your credit record. If you fall into difficulty in repaying the loan, your rating will likely be lowered or negatively affected.

If you pay back your loan on time, your credit rating may not be affected and you may even benefit from well-managed loans or credit cards it shows you can borrow responsibly.

Note that even if you make an application for a loan or credit product, it can show up on your credit file. Therefore it is wise to take your time and really compare products and services before you decide to make a full application for them.

If you are in any doubt, seek independent financial advice before you apply for any loan or credit card product.

What are the Advantages of Payday Loans?

Payday loans have advantageous aspects due to the easy application process, and the fact that most borrowers will receive the loan. Here are some of the main plus points to payday loans:

  • Easy to apply for
  • You will receive the loan quickly
  • Ideal for emergency cash situations
  • You can usually borrow between $100 and $1,000 (loan amounts vary between lenders)
  • Poor credit rating won't stand in your way
  • Low income requirements

What are the Drawbacks?

As with any type of loan, it is best to be careful before deciding to take a payday loan. There are some things to consider, such as whether you will be able to afford the loan repayment (in one go or numerous payments) and the interest rate.

Here are some of the basic drawbacks of payday loans:

  • Short term loan means repayment is due soon
  • Interest rates can be fairly high
  • Risk of ending up in further debt

Many payday loans carry interest rates which are higher than personal loans which are offered by regular banks. The reason for this is that the lender is handing out cash even when the credit rating of the borrower is not ideal for this higher element of risk, they will charge a higher rate.

Compare the rates and all other features of payday loans by using our simple comparison system.


Please note that Which Way To Pay New Zealand ( is not authorized to give personal financial advice under New Zealand's financial services regulations, including the Financial Advisers Act (Securities Commission New Zealand).

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