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Money emergencies are stressful and it is easy to panic and click apply with every lender you see. In this guide, we’ll explain how urgent payday loans work and how multiple applications can quietly hurt your chances of being approved. Loan Owl will walk you through what lenders see and simple steps you can take before you apply again.
Urgent payday loans are small short term loans that are usually under $2,000 and due within a few months. They are often used when something cannot wait, such as rent that is short, a car repair that stops you getting to work, or a power bill that is about to be disconnected.
Research for the Stop the Debt Trap Alliance found that between 2016 and 2019 just over 4.7 million payday loans were written in Australia, worth about $1.7 billion in total. Many of those loans were taken out to cover basic living costs rather than one off purchases.
When people are under pressure they often search online, compare a few urgent payday loans, then send the same application details to multiple lenders. It feels like this improves the odds of a fast yes. In practice, it usually just creates a row of credit checks and warning signs in the background.
MoneySmart points out that payday loans are one of the most expensive ways to borrow. They suggest that you look at hardship options with your existing providers and talk to a financial counsellor before taking on more short term debt.
Payday loans are marketed as quick and simple. Most online lenders promise applications that take only a few minutes and loan funding on the same day. Digital Finance Analytics has estimated that millions of payday loans have been written since 2016, and that a large share go to repeat borrowers who come back again and again when money runs short.
For some people that pattern turns into loan stacking. This is where you have one urgent payday loan, then take another to cover the first, then another to cover the second. From the lender side, this looks risky and can lead to very fast declines when you apply again.
Every time you apply for credit with a licensed lender they record a credit enquiry with one or more credit reporting bodies. In Australia the main bodies are Equifax, Experian and Illion. A credit enquiry is a note that you asked for credit, not just that you were approved.
Equifax explains that any credit enquiry can stay on your credit file for 5 years. That means a burst of urgent payday loan applications this month can still be visible several years from now. Lenders do not see every detail of your history, but they can see how often you have applied and what type of credit it was.
On top of credit checks, most payday lenders connect to your bank account through tools such as Illion Bank Statements or Credit Sense. These services read several months of transactions and summarise your income, spending and existing debts.
From those statements a lender can usually see:
If your statements show several recent deposits from payday lenders and several direct debits to lenders in the same pay cycle, that is a strong sign that you are already stretched.
Lenders must follow responsible lending rules under the National Consumer Credit Protection Act. They are expected to check that a small amount of credit contract will not put you into hardship. When they see multiple recent enquiries for urgent payday loans and several short term repayments already leaving your account, they often decide that another loan is unsafe.
Senate material citing Digital Finance Analytics estimates that about 3 million additional payday loans worth around $1.85 billion were taken out between 2016 and 2018 by about 1.6 million households. A significant share of those households used more than one lender. Regulators have warned that heavy repeat use and back to back loans are a sign of a debt spiral rather than a one off emergency.
A paper from UNSW Law also highlights how online payday lenders use fast digital checks and shared data to identify applicants who already have several loans, then either charge higher costs or decline those applications altogether.
A few quick checks can reduce the harm from multiple applications. They also help you decide whether an urgent payday loan is really the right move or whether another option fits better.
These steps do not remove past enquiries, but they help you see what a lender will see so you can decide whether another application right now will help or hurt.
It feels safer to apply to several lenders at once, especially when a bill is due today. In reality, spraying applications usually leaves you with several enquiries on your file and no more certainty that you will be approved.
Many lenders and comparison sites now offer an eligibility check that uses a soft enquiry or a short questionnaire.
Some tools tell you whether you are likely to be approved without any impact on your credit file. Others show an estimated loan range and repayment amount before you submit a full application.
Using these tools, then applying with only one lender, keeps your enquiry count lower and shows that you are making considered choices, not panicking.
Most lenders send updated information about your accounts and enquiries to credit reporting bodies each month. If you have just been declined, try to give yourself at least one full pay cycle before you send another urgent payday loan application. Use that time to pay any overdue bills, clear overdrafts and make sure your income keeps landing in the same account.
Lenders usually care more about whether money is coming in regularly and your direct debits are being honoured than about the exact dollar balance on the day. If you are still short after that and cannot wait, talk to your employer about a pay advance, speak with your utility or phone provider about a payment plan, or ask if your super fund offers hardship access. These steps will not add another enquiry to your credit file.
If you are already repaying one or more payday loans, another urgent loan can quickly make things worse. Many people in this position feel pressured to keep borrowing just to stay afloat.
Consumer Action and other community legal centres have documented cases where borrowers rolled one payday loan into another several times, paid hundreds of dollars in fees and ended up in default. These patterns helped drive calls for stronger caps and tighter rules on repeat lending.
If you are struggling, contact your lender early and explain the situation. Under the credit law they must consider a hardship request. You can ask for lower repayments over a longer period, a temporary pause, or a different schedule that fits your pay cycle. Talking to the National Debt Helpline on 1800 007 007 can also help you plan your next steps before you apply for any new credit.
If you have been declined more than once, you need to know what lenders are seeing. Start with your credit report. Check how many recent enquiries are listed, whether they are mostly for payday loans or other short term credit, and whether any defaults or serious late payments appear.
Then review your bank statements and circle three things.
Lenders use automated tools to scan for the same patterns. The more stable your income and the fewer missed or dishonoured payments, the safer you look, even if your income is modest.
Once you understand what is on your file, you can make small practical changes.
These steps will not fix everything overnight, but over a few months they can reduce missed payments, stabilise your cash flow and make your next application look less risky.
If every application is coming back as a no, more applications will rarely help. At that point it is usually better to pause, get advice and tackle the underlying problem.
MoneySmart and the National Debt Helpline both encourage people in this position to contact their existing lenders and essential service providers, such as energy and phone companies, and ask for hardship arrangements. You can also speak with a free financial counsellor about whether other options, including no interest loans or community support, are available.
If you believe a payday lender has not treated you fairly, you can also raise a complaint with the Australian Financial Complaints Authority. AFCA can look at whether the lender followed the rules and may help you reach a better outcome.
There is no legal limit on applications, but every enquiry is recorded and stays on your credit file for up to 5 years. From an approval point of view it is safer to apply to one lender at a time and wait for that outcome instead of sending several urgent payday loan applications in the same week.
Licensed payday lenders normally record a hard enquiry when you apply, even if they later decline your application. Soft checks and eligibility tools may not appear, but once you hit submit on a full application it almost always leaves a mark that other lenders can see.
Credit enquiries can appear on your file for 5 years, although lenders and credit scoring models usually focus more on what has happened in the last 6 to 12 months. A cluster of urgent payday loan enquiries in a short window is more worrying to lenders than a single check from several years ago.
Some lenders will consider another loan if your income is strong and your existing repayments are small. Others will automatically decline if they see an active payday loan in your bank statements. They need to be satisfied that an extra loan will not cause hardship. If you are already struggling with the current repayments, it is better to talk to your lender about hardship options instead of adding a new loan.
A broker that uses soft checks can help you avoid sending full applications to many lenders at once. However, if the broker passes your details to several lenders who then run their own credit checks, you could still end up with multiple enquiries. Always ask whether you are giving consent for a full application or only a soft eligibility check.
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Disclaimer
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