Positive signs of more development within the Australian payday loan industry
As per recent reports, the payday loan industry has drifted from the periphery of consumer finance in Australia and has been sent to the mainstream in spite of the regulatory impediments and the challenged reputation. This short term lending market of this country has been estimated to be worth around $800 million in a year. But overseas development clearly shows some positive movements within the sector in the years to come. The Australian federal government is all set to bring forth some new laws for payday loans, forcing the existing operations to implement them. Following the new laws, this industry will probably recover through innovation in marketing, delivery and product designing.
The ‘small amount credit contracts’ — A boon for credit strapped individuals
In the Australian legislation, payday loans are considered as ‘small amount credit contracts” and while there are payday lenders Australia, who only deal with such loans, there are some others who will offer a wide array of lending options. One of the most interesting developments within the nation after the legislative changes is the existence of the dual market. While on one side, there are the low-income lenders (that have 150 outlets throughout Australia); on the other hand is the online industry that primarily targets the high income earners. Outside the country, the entire payday loan industry has expanded to become a noteworthy component of the consumer finance markets. In fact, according to statistics, the total revenue of the cash advance loan industry in the US is presently $11 billion while the UK market was worth around $5 at the end of 2014.
Australian government conducts a review of the market in July, 2015
Now that we know that there will be a positive development in the payday loan Australia market, what we can learn is that the growth of the same market in other places of the world can be useful when the Aussie government conducts a detailed review of the market in July, 2015. The previous intervention of the federal government in 2014 capped the rates on the cash advance loans at 4% every month and also restrained the establishment fees to 20% of the total principle loan amount. Taking out concurrent loans and refinancing the loans that the borrowers already had were also prohibited.
The timing of the payday loans is all that matters
Irrespective of the purpose for which the payday Australia loans are usually taken out, it can’t be denied that there is a vital role of these high-cost and short-term loans in the modern economy. During a time when there are mid-month financial contingencies, it is the payday loans that help the borrowers meet urgent need of cash. Nevertheless, customers should shop around and compare and contrast rates before settling down with the final one.
In the near future, the payday loan industry will take over the entire financial market, not only in Australia but throughout the world. Consumers should be wary about taking the right steps while borrowing.