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Do Instant Approval Loans Exist in Australia?

Rachel Horan

Rachel Horan

May 14, 20213 minute read
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If you’re searching for an instant approval loan, you are likely on the hunt for financial assistance as soon as possible. However, instant approval loans can be murky waters in Australia. This is because lenders must follow responsible lending guidelines and do their due diligence to ensure that a loan is suitable for a borrower.

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    This article breaks down instant approval loans in Australia including whether they are actually offered and if they’re safe.

    What are instant approval loans?

    Instant approval loans, as the name suggests, are personal loans that are approved instantly after you submit an application. Many lenders claim to offer instant approval loans, however the fine print often reveals that this is not actually the case. The Australian Securities and Investments Commission (ASIC) has come down heavily on businesses that advertise ‘instant decisions’ or loans approved ‘within minutes’.

    Who is ASIC and what do they do?

    ASIC is an independent Australian Government body responsible for regulating the financial services industry, as well as other industries including corporate, markets, and consumer credit. The legislation enacted by ASIC in 2019 “strengthened the criminal and civil penalties for financial sector misconduct.”

    An example of ASIC taking action was the penalties handed out to Paid International Ltd for $30,600 after three infringement notices for misleading representations in advertisements. ASIC stated that they were “concerned the ads were false or misleading because the lender’s assessment of a loan application was not ‘instant’ or completed ‘within minutes’.”

    ASIC’s Consultation Paper 178, regarding advertising credit products and credit services, discusses the legal obligations of lenders when advertising their loan products. RG 234.106 states that a loan assessment of suitability must be based on inquiries about a consumer’s requirements, objectives, and financial situation. Additionally, it says that “credit licensees should carefully consider whether promotional claims about ‘no-doc’ type products, or ‘instant’ or very fast approval, or approval with ‘no credit checks’, are either misleading or reflect practices that do not comply with the responsible lending obligations.”

    This essentially means that any provider that claims to offer instant approval loans are either misleading or not compliant with the responsible lending practices set by ASIC.

    What is responsible lending?

    The responsible lending obligations were put in place to protect consumers from entering into credit agreements that are not suitable or financially affordable for them. It is the responsibility of the lender to ensure that they conduct sufficient inquiries into the suitability of a product before approving any credit applications. The responsible lending obligations involve:

    • Making reasonable inquiries into an applicant’s financial situation, their reason for finance and their objectives.
    • Taking steps to verify the financial situation of the consumer.
    • Making a preliminary assessment or final assessment about whether the credit contract is ‘not unsuitable’ for the consumer.
    • If a consumer requests it, being able to provide them with a written copy of this assessment (whichever is applicable).

    So, are instant approval loans safe?

    It is clear that any lender that claims to offer instant approval loans are either misleading consumers or not following the responsible lending guidelines. Either way, the outcome is not ideal. If they are misleading consumers, they may receive repercussions in the form of fines from ASIC.

    Alternatively, if they are not following responsible lending guidelines, they can lose their credit licence. Worse than that, they may create unnecessary financial hardship for a consumer that cannot reasonably afford a loan product that they applied for. This is because the lender cannot make reasonable inquiries into the applicant and take steps to verify this information while simultaneously providing instant approval.

    So, while there are lenders that claim to offer instant approval loans, it may be better to consider a credit provider that does their due diligence and follow industry obligations to ensure the loan is not unsuitable for an applicant.

    What should I do if I need a quick loan?

    Many online lenders are great options for fast financial products. Fintechs are financial technologists who specialise in utilising innovative technology solutions to deliver fast loan outcomes. With over 800 active fintechs to choose from, an online loan could be a great option for you if you are in an emergency and need fast cash.

    Jacaranda Finance, an award-winning fintech that specialises in inclusive short term lending, can often deliver extremely fast loan outcomes, typically within 60-minutes*. This is because we have innovative AI and machine learning that processes parts of the application instantly, and dedicated underwriters that review and complete the application process. Once approved, we can provide fast loan payouts to our clients (if they have NPP-enabled bank accounts).

    *Subject to when you submit your application

    Copyright © www.jacarandafinance.com.au Jacaranda Finance Pty Ltd ® ABN 53 162 078 195 Australian Credit Licence 456 404, Pawnbroking License Number 4221738. The information on this web-page is general information and does not take into account your objectives, financial situation or needs. Information provided on this website is general in nature and does not constitute financial advice.

    Rachel Horan
    Rachel Horan

    Written by Rachel Horan

    Rachel Horan is a Content Writer for Jacaranda Finance. Rachel has previously produced content for Brisbane City Council, Black & White Cabs, and Clubs Queensland. She has a Bachelor of Mass Communication with Distinction from the Queensland University of Technology.

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