Alternatives to high cost payday loans

If you are in debt to a payday lender, or struggling to make debt payments and considering a payday loan, it’s a good idea to find a free financial counsellor.

The most common reasons for taking out a payday loan are

  • car repairs and registration
  • utility bills
  • food and other essentials
  • rent and mortgage payments

There are a number of schemes that can assist you with these debts. Which schemes will help with which debts is set out below

No Interest Loans Schemes (NILS)

No Interest Loan Schemes offer interest free loans for families and individuals on low incomes for the purchase of essential household goods. The scheme allows people receiving Centrelink payments or holding a health care card to borrow up to $1000, to be repaid over 12-18 months interest free.

No Interest Loan Schemes can be accessed via community agencies. Referrals can be obtained through a free financial counsellor.

Low Interest Loans Schemes

Step Up Loans (operated by NAB and Good Shepherd) offers loans for between $800 and $3000 for essential personal, household and domestic goods and services. Progress Loans (operated by ANZ and the Brotherhood of St Laurence) offer affordable small amount loans for amounts between $500 and $3000 for essential goods and up to $5,000 for cars.

Progress Loans: Contact the Brotherhood of St Laurence on 1300 576 799, or see more information at

Step Up Loans

Centrelink Advance

If you currently receive payments from Centrelink, a lump sum Advance Payment of your Social Security payment may be available if you need some money to help pay your expenses. The amount of the advance is limited by minimum and maximum amounts which are determined by the type and rate of payment you receive. For more information see this Centrelink page.

Hardship Policies

Companies that provide utilities such as electricity, gas, water, phone and internet services have hardship policies to help people stay connected to essential services when they are in financial trouble. If you can’t pay your bill on time, call the utility company. Companies will usually be able to place you on an affordable payment plan to allow you to pay off the bill in instalments.

Many banks also have similar policies to help people struggling with debt repayments, for example mortgages. Contact your bank and ask to speak to the hardship area if you are having trouble paying off a debt.


Centrepay is a free direct bill-paying service offered to customers receiving payments from Centrelink. Through Centrepay you can choose to pay bills by having a regular amount deducted from your Centrelink payment.

Customers who choose to use Centrepay also benefit from knowing that their payments are under control. Instead of having large bills every month or quarter your bills are paid in manageable amounts from your payment, making it easier for you to budget. More infomation from the Centrepay site.

Emergency relief

The Australian Government funds a number of organisations to provide assistance for people in financial crisis.

Assistance from Emergency Relief providers to clients is generally in the form of:

  • purchase vouchers of a fixed value (for example, food, transport or chemist vouchers)
  • part-payment of an outstanding account (for example rent/accommodation; utility account/s)
  • material assistance such as household goods, food parcels or clothing
  • budgeting assistance and
  • information, advocacy and referral

Call 1300 653 227 or see here for information on services in your area.

Which scheme for which debt?

The following table sets out which schemes are available for which debts. For more information about eligibility see …

Table of alternatives to payday loans

Consumer groups have argued that some of these schemes should be extended and that other reforms could be introduced to help consumers facing these kinds of debt. These are set out on the ‘further reforms‘ page.

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