Payday loans are a necessary evil for some people. These lenders often loan money to people with very poor credit and repayment history, at a cost. They charge very high interest rates and often have large establishment fees added to the value of the loan. Brisbane based finance company Jacaranda Finance is a fintech lender that dabbles in the payday loan space. Let's take a look at their service and see whether that dabble is more of a toe in the water or a full swan dive into the dark world of alternative lending.
Overview:
What is Jacaranda Finance?
Jacaranda Finance is a finance company that provides loans from $1000 to $15000. They started as a payday loan company, and as they have grown have started to offer larger loans but smaller interest rates. They are a non-bank lender, meaning they are privately funded. This also means they can charge whatever interest rates they like, as long as they are below the 48% cap set by the Australian government in 2017
How does Jacaranda Finance work?
The application process is pretty simple. You use a slider to select how much you would like to borrow, a second slider to select how long you would like to borrow it for and the calculator lets you know how much your repayments will be in either weekly, fortnightly or monthly instalments. You then click apply and the next page asks you what the loan is for. You then give some personal details like your name and date of birth. To proceed to the next step, you must put in your phone number to receive a confirmation code.
After that, confirmation is automated depending on your financial circumstances. They claim to pay within 60 seconds, but in reality it can take up to 48 hours depending on your bank.
Will Jacaranda Finance check my credit?
Yes, Jacaranda Finance will check your credit. This won't necessarily stop you from getting a loan however. A bad credit score will simply mean that you pay a higher rate of interest, according to their tiered interest rate system. Just keep in mind that applying for a payday loan with Jacaranda will be visible on your credit file for up to 2 years and will affect your credit score.
Will a loan from Jacaranda Finance affect my credit score?
Yes, taking a line of credit of any type will temporarily affect your credit score. Furthermore, if you have a history of payday loans, it may affect your creditworthiness and affect your ability to get a bigger loan like a mortgage in the future.
How long do Jacaranda loans take to approve?
Jacaranda Finance claim to offer instant approval - but the reality can be much slower. They claim that approval will take no more than one hour during business hours - but you still need to factor in the time it will take to provide supporting documents and complete the application. They are certainly faster than a bank - that's what you pay for when it comes to payday loans.
Jacaranda loan fees
Jacaranda loans do offer a lower interest rate than most payday loans - however they still have any high fees that set them apart from a traditional bank loan. This includes establishment fees, and more importantly, arrears fee. These fees are charged when you miss a payment and fall behind on your loan. Arrears fees are particularly damaging as they get added to the balance of your loan, increasing the amount of interest you pay overall.
Establishment fee: 20% (up to $1000)
Arrears fee: $35
Direct debit cancellation fee: $60
Jacaranda are not at all transparent about their establishment fees on their website. This should ring alarm bells, as they are not upfront about the costs of their loans. Don't be fooled by their slick branding - they are still a payday loan.
Jacaranda Finance Interest Rate
Jacaranda finance offer a tiered interest rate depending on your credit rating. This makes them look like a low interest payday loan option. However, they still charge a 4% monthly fee on their highest interest loans. This equates to a 48% interest rate. To be fair, not everyone will be paying that rate, but a majority will not be paying their advertised 8.69% either. With interest rates that vary from 8.69% to 48%, it's hard to know exactly what your loan will cost you.
Does Jacaranda Finance loan to Centrelink recipients?
Yes, Jacaranda Finance provide Centrelink loans. However, they treat your Centrelink income as an alternative form of income, so if it is your only form of income you may struggle with approval. However, they do loan to pensioners and people on disability payments, so you may get approved.
Is Jacaranda Finance legit?
Yes, Jacaranda Finance are a legit loan company. They are bound my the same credit laws as other lending institutions. Therefore, if you apply for a loan with Jacaranda you will receive your money as agreed. However, you may find yourself paying back more than you originally expected to.
Is Jacaranda Finance safe?
Yes, Jacaranda Finance are a safe and legal company to borrow money from. However, entering the payday loan cycle can be the beginning of a debt spiral. You should think twice before using fast loans with high interest rates.
Does Jacaranda Finance loan to people with bad credit?
Yes, Jacaranda Finance do provide loans for people with bad credit. This does come at a cost though. Jacaranda Finance charge higher interest rates for people with bad credit. This is a way of protecting their investment from the risk of people not paying their money back, but it is hardly fair for consumers.
Are Jacaranda Finance loans secured against a car?
Jacaranda Finance offer unsecured loans for amounts under $2000. This means that you can borrow up to $2000 without offering your car as collateral. Any amount over that has to be secured with an asset such as a car or motorbike. What does that mean? If you are unable to pay the money back you may lose your car.
Will I be approved for a loan with Jacaranda Finance?
While Jacaranda Finance keep their requirements for approval close to their chests, chances are if you have steady employment and are not currently bankrupt then you will be able to get a loan approved with Jacaranda.
Does Jacaranda Finance do car loans?
This is a trick that many payday loan companies use. They state that they do bond loans, car loans, debt consolidation loans - the list goes on. But really, they only offer one product - a high interest cash loan. They just rebrand it as a car loan, because once you get the loan you could definitely go purchase a car with it! However, unlike a car loan from a bank or dealership, you will be paying high rates
The Bottom Line
Jacaranda portray themselves as a new age, fast loan company that are different to your average high interest loan provider. However, be careful to read your terms and conditions before applying for a loan. The quick fix for your money problems are rarely the best option. Consider having a look at 4 different types of budgets, and see if one of them works for you. Happy Saving!