This report explores one aspect of the consumer credit sector: payday loans. Payday loans are a ‘fringe’ credit product, operating outside the mainstream credit sector.
In this report they are defined as loans that are small (no more than $1,000 but typically less than $250) and short-term (usually with repayment periods of 30 days or less). They are usually approved quickly and the borrower is charged a fee rather than an interest rate.
There has been rapid growth in the payday lending sector in Tasmania since 2003, and the market has been highly volatile, with significant turnover among providers. More recently, there appears to have been some stabilisation, partly due to one provider, Cash Converters, obtaining significant market share through the three outlets it has established in the state.
In addition to shopfront providers, there are internet-based providers of payday loans. Neither type of provider is currently required to hold a license to offer loans in Tasmania.