What small loans really cost in Australia

Skypay Connect · Updated August 2026 · All guides

Small loan pricing in Australia is capped by law - which is good news - but the caps are still substantial, and the differences between loan types catch people out. Here's the whole picture in one place, with worked examples.

The two loan types and their legal caps

	Small loans (up to $2,000)	Medium loans ($2,001-$5,000)
Establishment fee	Up to 20% of the amount	Up to $400
Ongoing cost	Up to 4% of the amount per month	Interest up to 48% p.a.
Typical term	2-12 months	4-24 months

Worked examples at the caps

$500 over 3 months: up to $100 establishment + $20/month = repay up to about $660.
$2,000 over 6 months: up to $400 establishment + $80/month = repay up to about $2,880.
$3,000 over 12 months: $400 establishment + interest at up to 48% p.a. = repay roughly $4,100-$4,300 depending on structure.

Not every lender charges the maximum, and shorter terms cost less in total - but always compare the total amount repayable, not the weekly repayment. A small weekly figure over a long term is how a cheap-looking loan becomes an expensive one.

Costs to watch beyond the headline

Direct debit dishonour fees - missing a repayment usually costs a fee from the lender and sometimes one from your bank too.
Default fees - capped, but real. Under the law you can never be required to repay more than a set multiple of a small loan's amount, but getting anywhere near that hurts.
Early payout - most small lenders let you repay early and save the remaining monthly fees. If a lender penalises early repayment, ask why.

Before you borrow at all

WARNING - Do you really need a loan today? It can be expensive to borrow small amounts of money and borrowing may not solve your money problems. Check your options before you borrow: for information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor; talk to your electricity, gas, phone or water provider to see if you can work out a payment plan; if you are on government benefits, ask if you can receive an advance from Centrelink. The Government's MoneySmart website shows how small amount loans work and suggests other options that may help you.

Comparing offers the sane way

Whatever you're offered, ask three questions: What is the total I will repay? What is each repayment and does it fit my pay cycle? What happens if I miss one? If you can answer those three, you understand the loan better than most borrowers ever do.

One application, multiple lenders considered.

See your options - about 90 seconds