Australians have been warned about using increasingly popular “pay advance” services over concerns they may be exposing themselves to excessive debt and unregulated products.
Pay advance services offer workers access to their pay ahead of time, with users able to withdraw anywhere between $50 to $2000, which they then repay – along with a flat rate or a percentage fee – to the lender come payday. The services operate similar to payday lending, albeit with fewer fees and shorter repayment timeframes.
financial advice division said while they may seem like a “quick fix”, users should seek other options. Borrowing money through a pay advance service can also affect your ability to borrow money, such as a home loan, in the future, as lenders often take a dim view of pay advance and buy now, pay later services when assessing a borrower’s spending habits.
“They’re so easy to sign up for, and they often don’t check to see how indebted the person they’re lending to is before they give them these debts.”Robson advises people in financial hardship to look at no-interest loans, or utility bill financial hardship relief, as an alternative, rather than short-term loans, or to contact the National Debt Hotline and speak to a financial counsellor.
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