The Small loan with BIG protections for consumers

Here’s what you need to know about a SACC (Small Amount Credit Contract) or small loan that has BIG protections for consumers in Australia.

A small loan is highly regulated by the Australian Government, it can only be provided by ASIC licensed lenders, and has the highest level of consumer protection of any personal loan on the market.

 

What protections can consumers expect of a small loan or Small Amount Credit Contract?

In Australia SACCs are available from 16 days to 1 year for up to $2,000, with capped fees. By choosing a SACC or small loan, consumers can be assured of:

  • Affordable repayments
  • Capped government set fees
  • Debt spiral protection
  • ASIC licensed lender protections
  • Free dispute resolution
  • And knowledge that a SACC or SMALL LOAN comes with BIG protections for consumers

Fact

Indepth legislation and guidance

A small loan has a mammoth 4,000 pages of specific Government Legislation and guidance for protection of consumers with an additional 6,000 pages of conditions for lenders to abide by.

Fact

Repayment fees are capped

Repayment fees are capped at a maximum of 20% to establish the loan and then 4% per month.

Fact

SACCs are the only credit product in Australia to have a DEBT SPIRAL CAP to protect consumers

If the consumer loses their job, gets sick or has trouble repaying their loan, unlike any other loan or credit card, the MAXIMUM they can EVER repay on a small loan is double the original loan amount. Including all fees and charges.

Fact

Small loan lenders must BY LAW take BIG precautions to make sure consumers can afford to repay the loan

The law requires a lender to consider 90 days of a consumer’s bank transactions to assess their cash flow.

Fact

Additional checks required if a consumer has more than 2 small loans in any 90 day period

Legislation also requires a lender to do further checks and affordability analysis if a consumer requires more than 2 small loans in any 90 day period.

Fact

Repayment limits

If a borrower receives more than half their income from government benefits… then these consumers cannot be asked to commit more than 20% of their income to small amount loan repayments.

BUT ISN’T THAT A PAYDAY LOAN?
NO.
A SACC IS NOT A ‘PAYDAY LOAN’.

Payday loans were made illegal in Australia in March 2013. Many Payday loans had no limit on fees and charges and the maximum amount that could be borrowed. Meanwhile SACCs limit establishment and monthly fees and have a limit on the amount that can be borrowed as well as repaid.

THE DIFFERENCE BETWEEN A SACC AND A PAYDAY LOAN:

Repaid on next pay day

SACC

Length of loan is dependent on consumer’s capacity to repay the loan.

Payday Loan

Historically repaid on the consumers next payday.

Limit on fees and charges

SACC

Yes – establishment fee is capped at 20% and 4% per month

Payday Loan

Most had no limits

Limit of maximum amount borrowed

SACC

Yes – no more than $2,000 can be borrowed

Payday Loan

Most had no limits

Offered by ASIC licensed lenders only

SACC

Yes – only available through ASIC licensed lenders

Payday Loan

No – anyone could call themselves a lender prior to 1st July 2010

Offered by ASIC licensed lenders only

SACC

Yes – the most a consumer can ever repay is double the amount of the original loan – including fees and interest

Payday Loan

No – there were no safeguards in place to prevent debt spiral

Legal in Australia

SACC

Yes – SACCs are a Government credit product

Payday Loan

No – Payday loans were made illegal in Australia in 2013

Still have questions?

Watch the video, check out the myths and facts about small loans or request our information booklet.