FourFour two-thirds of payday loan consumers are in debt, and one in five of them are still struggling to pay their bills, according to a new report.
The report by the National Association of Consumer Advocates (NACA) found the average borrower on payday loans has a monthly loan balance of $913, and a repayment period of less than five months.
A whopping 65% of payday borrowers on payday lending are unable to pay off their debts within five years, the report found.
The NACA also found that payday loan lenders are increasingly targeting people who are struggling with unemployment, homelessness and other hardship issues.
It said there is a growing awareness among borrowers that payday loans are a viable way to finance their bills.
The report also highlighted the lack of transparency around the fees charged for payday loans, with many borrowers not being told how much they are getting, the extent to which the loans will be paid off and how long it will take.
The number of payday loans that are advertised online is increasing rapidly, with some companies advertising up to 40,000 loans a day, according the NACA.
A spokesperson for the Department of Business, Innovation and Employment told FourFour Two that it had no data on the number of borrowers on loans online.
“The Australian Bureau of Statistics is working with the National Consumer Law Reform Network to develop a national payday lending strategy to address the growing affordability issue,” she said.
In the latest survey, a quarter of respondents said they had lost their jobs, while a third said they could not afford to pay back their loans.
The survey also found borrowers on debt-free payday loans were more likely to be people who were at the very top of the financial ladder, with 30% of them being millionaires.
Payday loan borrowers also reported higher levels of stress and anxiety.
More than one-third of respondents had been diagnosed with depression and 41% had experienced severe financial stress.
The average payday loan payment for a first-time loanholder was $531, the NAAC report found, compared to $340 for borrowers with longer-term loans.