If you are in the market for a personal loan, a number of banks and lenders offer same day approval. This means if you require a cash injection in a hurry for an unexpected expense, you may be able to apply, receive approval and have the funds deposited into your account on the same day.

How do same day personal loans work?

As the name suggests, same day personal loans allow borrowers to apply, with the bank or lender assessing the application, coming to a decision and making the personal loan payment typically in less than a day. Same day personal loans are simply another type of personal loan, with the difference being the speed it takes for banks or lenders to reach a decision based on your application.

It's important to note that while some banks and lenders may offer same day personal loans, if you are not prepared with the required documentation and a sufficient credit rating to satisfy lending requirements, your application may in fact take longer to process.

How much do same day personal loans cost?

Like any personal loan, a bank or lender will charge you an interest and comparison rate calculated on the amount you require to borrow. This means in addition to paying back the amount borrowed, you will be required to also pay back interest, adding to the overall cost of your same day personal loan.

Before you sign on the dotted line to secure a same day personal loan, it's important to first compare interest and comparison rates across banks and lenders to ensure you are receiving a competitive-rate loan. Completing this step alone has the potential to save you hundreds of dollars in interest repayments.

Comparing fees across banks and lenders also has the potential to save you hundreds across the life of your personal loan. These can include upfront or application fees, ongoing fees, early-exit fees and redraw fees.

To determine how much a same day personal loan will cost you based on your required loan amount and interest rates available from banks and lenders, check out InfoChoice's personal loan calculator.

Beware of payday loans

Same day personal loans are not be confused with payday loans, despite sounding so similar. Where the two differ is the structure of interest rates over time.

A payday loan allows you to borrow smaller amounts of money, generally up to $5,000, which has to be repaid over a shorter time frame. This time frame is generally less than 62 days, meaning they are not required to abide by the National Consumer Credit Protection Act of 2009. The Act includes provisions to assess a borrower's capacity to repay the loan and to offer hardship arrangements if they can't.

Payday lenders usually have very few eligibility requirements and the interest rates might not look too high, which can appeal to those desperate for cash. Payday lenders make up for the lack of interest by slugging borrowers with high fees, which quickly add up. This can start a debt spiral, and may lead some having to take out further credit to simply pay for fees given they can add up fast and may impact your ability make repayments.

Uses for same day personal loans

In similar fashion to a regular personal loan, same day personal loans can be used in a hurry for a variety of personal expenses - whether those be expected or unexpected. These can include:

  • Consolidating debts.
  • Emergency repairs or renovations.
  • Medical bills.
  • Travel.
  • Big-ticket purchases.

Applying for a same day personal loan

To apply for a same day personal loan, lending requirements will typically differ across banks and lenders. These will include:

  • Applicants must be aged 18 years or older.
  • Applicants must be an Australian citizen, permanent resident or have a valid visa.
  • Applicants must be employed and receiving regular income.
  • Applicants must possess a good credit rating.

You will also need to provide documents for your application. These include:

  • Proof of identity such as driver's license or passport.
  • Proof of employment and income such as pay slips and tax returns.
  • Details of any other debts or financial commitments.
  • Details of additional assets if you are applying for a secured loan.
  • Mortgage or rental property statements.