Good enough for Google. Good enough for Australia.

Google’s decision last week to ban the advertisement of payday loans demonstrates that the world is moving against the proliferation of payday loans. It is Australia’s turn to show leadership and clamp down on these exploitative products.

Today, Consumer Action Law Centre is using this globally significant decision by Google to launch a new calculator that will tell Australians for the first time what the true interest rate of their payday loan is.

The calculator is unique as it provides consumers with an Annualised Percentage Rate (APR), such as that advertised on other loans including personal loans and credit cards. An APR is the most appropriate way to measure the cost of payday loans as it is easily understood by Australians, and it allows a comparison with other credit products.

The launch of the calculator also coincides with Consumer Action’s submission to the Treasury, responding to the final report of the Small Amount Credit Contracts Review Panel (Review Panel). The Review Panel has been investigating the adequacy of the regulations and laws relating to payday loans and consumer leases (often known as rent-try-buy).

As part of a suite of recommendations, the Review Panel has recommended that disclosure of the APR of payday loans and consumer leases be provided to consumers. This has been welcomed by Consumer Action.

However, in its submission to the Government, Consumer Action states that, ‘the recommendations do not go far enough to address the issue of affordability and prevent ongoing debt spirals’. Consumer Action is calling for a cost cap on all payday loans and consumer leases of 48% APR.

Quotes attributable to Gerard Brody, CEO Consumer Action Law Centre:

‘We couldn’t wait for the full disclosure of the interest charged on payday loans to be legislated. That’s why we created the calculator. Australians deserve to know what they are getting into before they take out a payday loan.”

“Google’s decision is ground-breaking. It effectively places payday loans in the same category as other dangerous good such as firearms, tobacco and explosives.”

“Payday loans are dangerously expensive. The exclusion from the 48% APR cap on credit products enjoyed by payday lenders exacerbates the debt spiral effect that payday lending can cause.”



Payday lenders offer short-term loans with annualised percentage rates of around 240 per cent. They often set up direct debits repayments so that they withdraw money from the borrower’s account on their payday or pension day. This means that the lender gets paid before the borrower has had a chance to allocate sufficient money for groceries, rent, medicine and utility bills. It puts borrowers in a perilous position and, sadly, they often go back to the lender for another loan just to meet their living expenses. We’ve seen cases where a borrower has had up to 70 short-term loans in the space of three years. See our infographic on payday lending here

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