Wage advance products are a new category of lending that has exploded in popularity in recent years as a cheaper alternative to payday loans.
Big claims are made by the service providers that there is “no effect on your credit file”, and that “all you pay is 5%”, but there is so much more to this story than you may think.
In this article, I’ll share the reality of using these services and how they can stop you from getting a loan in the future.
In This Post:
What is a Wage Advance Product?
How They Work
Wage advance products let employees access a portion of their earned wages before payday for a fixed fee.
Up to 25% of your salary can be accessed in advance, in return for a fixed fee of 5%.
Typically, users download an app, link their bank account, and request a specific amount. The process is quick, easy, and tempting for users who may want the money but don’t necessarily NEED it.
Fees are perceived as small compared to alternative short-term loans, but the costs can add up fast if used frequently.
We’ll lay out the math for you shortly!
Why Use a Wage Advance Product
People turn to wage advances for various reasons, such as unexpected medical bills, car repairs, or simply bridging the gap between pay cycles.
In the past, expensive payday loans were available to consumers who needed emergency funds.
However, these were made illegal some years ago and replaced by a regulated loan category called Small Amount Credit Contracts (SACCs).
The minimum term for a SACC loan is 16 days, a 20% establishment fee is charged when opening the loan, and up to 4% interest per month will be payable for the loan term.
You can see why a 5% fixed fee to get some cash for a few days, with no credit checks, is appealing in comparison.
However, if you pay a 5% fee to borrow money for two weeks then you are essentially paying an annualised interest rate of 130%.
Which is not a large amount if you do it once. If you continue to do it every pay cycle to fill a gap in your budget then you will be far better off getting a personal loan.
The problem is the use of these services will make it more challenging to get a loan approval. So you may find yourself stuck.
Australian Pay Advance Providers
There are several salary advance service providers in the Australian market, including Beforepay, MyPayNow, WagePay, and Commbank Advance Pay.
Each has a slightly different pricing structure and maximum lend. But at their core, they all do the same thing – quick and easy access to your earned income.
How Wage Advances Affect Your Credit
I just told you that no credit checks are conducted when you apply for a wage advance product. So how could it affect your creditworthiness?
Your Credit File
Most wage advances do not appear directly on your credit report. So there will be no impact on your credit score at all.
Somehow, the new legislation requiring Buy Now Pay Later providers to do credit checks has missed pay advance providers completely.
So for the foreseeable future, your credit file is safe. This is a huge advantage for those who have been regular users of these products – you can fix any damage very quickly.
Banking Transaction History
When applying for a car loan most lenders will require 3-6 months worth of bank statements.
This is where deposits and repayments to wage advance services will be easily detectable, even though it is not on your credit file.
Are Salary Advances Low Cost Credit Contracts?
As of June 2025, new legislation was introduced to bring BNPL products under the National Credit Code through a new product category called LCCCs.
When you apply for a new BNPL product, or to increase your limit on a BNPL product, the lender is obliged to do a credit check.
This will leave a mark on your credit file that will be visible to other lenders when you apply for future credit.
Somehow, Wage Advance products have avoided inclusion in this legislation and there remains no requirement for a credit check.
So, there is no enquiry recorded on your credit file and your credit score will not be affected.
Car Loan Application Process
Lenders will scrutinise your bank statements as part of the application process to assess your spending habits and financial health as a way to manage risk.
What you may not know is that lenders are obligated by law not to lend to anyone who may be at risk of “substantial hardship”.
Regular use of wage advance services indicates you may not be managing your household budget effectively and the risk of hardship is high, and approving a loan could be a breach of the law.
Loan Eligibility (Not Serviceability)
Most lenders will have hard rules around the regular use of wage advance products. It is a risk they will not consider due to the laws around financial hardship.
So if you have a pattern of use you will be ineligible for a car loan, and your application will not even be assessed.
You will be knocked out without any consideration of whether you can service the loan repayments effectively or not.
How Lenders Treat Salary Advances
Every lender has a different policy on salary advances, and they are constantly changing. This is why using an auto finance broker can help you find the lender that will accommodate your current circumstances.
Get in touch with Gusto Finance below for an honest assessment of your circumstances and what you can do about it.
How Many Times Can I Use a Salary Advance?
The golden rule is that NEVER is the best option.
However, some lenders will be ok with a single use of a wage advance service. But it will reduce your options and may result in a more expensive loan.
If you have advanced your pay more than once then no lender is going to consider you for a loan.
Frequent Wage Advances as a Pattern
Lenders may interpret multiple wage advances as a sign of poor money management or insufficient income.
Unless you have a lot of disposable income, catching up after advancing 25% of your salary can be very challenging.
It can lead to a debt spiral and adding more debt to your expenses will only make things harder.
How to Avoid Use of Wage Advances
This is easier said than done, but the best thing you can do is avoid the use of these services altogether.
Household Budgeting
Creating a realistic household budget can help you allocate funds more effectively. Track your expenses, prioritise essential costs, and set aside savings for emergencies.
Where people are often caught out is with annual expenses they had forgotten (e.g. school fees, insurance etc.), or an emergency expense (e.g. a car repair).
If you plan for these in your budget with a non-specified emergency fund then you may be able to cover these expenses without borrowing money.
Personal Loan for Large Expenses
Instead of relying on wage advances, consider a personal loan for significant expenses.
These loans often come with lower interest rates and more manageable repayment terms.
If I Have Used Wage Advances, What Now?
Speak to a Broker Today
If you’ve used wage advances, consulting a finance broker can help.
Our expert brokers can provide an honest assessment of your position and guide you through some steps you can take to improve your situation.
Any future application will be about financial discipline and timing.
How to Strengthen Your Loan Application
Most lenders will look at 90 days’ worth of bank statements. If you repay all of your wage advance products and then wait 90 days then your application should not be affected.
Remember, your credit file does not have a record of these products (for now).
I would also treat the use of BNPL with the same level of caution when preparing for a future car loan application.
Common Mistakes to Avoid
Using Wage Advances as a Quick Fix Too Often
Regardless of your intention to apply for a car loan, relying on wage advances to cover regular expenses can trap you in a cycle of dependency that will only harm you over the long term.
These services are far more expensive than they first appear and the impact on your credit eligibility is real.
So take the sales pitch with a grain of salt. They are only telling you half the story.
Plan for Annual Expenses
Keep a written record of all of your expenses that come up infrequently. Open a separate bank account and set up an automatic deduction into that account each pay cycle.
Even if you put away $20 a week, that is over a thousand dollars that you will have each year to pay your insurance bill or school fees.
Save for Emergency Expenses
This is easier said than done, but even a small amount put away regularly can help when an emergency hits.
No matter how hard this is, resorting to short-term lending will place much more pressure on your finances. $10 a week now can save you hundreds of wasted dollars later.
Considering Overall Financial Health
Short-term fixes shouldn’t come at the expense of long-term stability.
Focus on creating a budget that supports your goals and reduces the need for wage advances. The amount of stress this will save you cannot be underestimated.
Building financial discipline is a muscle to develop over time.
Conclusion
Wage advances can be a helpful tool of last resort. But if you are a regular user then it is time to plan to wean yourself away from these services.
They are expensive and will impact your ability to get a car loan in the future.
The good news is that you can undo the damage in as little as 90 days. So delete those apps from your phone, make your final repayment, and start practicing that discipline.
In no time, your car loan application will be in far better shape!
