Common Myths People Believe About Short-Term Loans

Think you’ve heard everything you need to know about short-term loans? In this quick article, we’re busting down some of the most common misconceptions about these kinds of short-term cash solutions (also known as payday loans). Have a quick read through and see if any of these less-known truths tells you something you didn’t know. We’ll start with one of the most common myths out there:

Myth 1: Payday loans are designed to trap people into debt

Nothing could be further from the truth. It doesn’t do anyone any good when a loan is defaulted. If anyone ever tells you it’s possible to survive in finance by handing out money to people that can’t afford to pay it back, they haven’t really thought it through. At Cigno Loans, our main aim is to help people out when they need it most.

The first thing we look for is proof that the applicant earns more than enough to afford the loan they’re applying for. Any reputable payday loans company will do the same because they know the only way to succeed in this industry now is to provide a helpful service, look after the needs of loyal customers, and concentrate on ensuring every loan is completed without difficulty.

Myth 2: Short-term loans include loads of hidden fees

Ours certainly don’t! Again, if we bombarded you with piles of hidden fees on your first loan from us, would you come back to us the next time you needed help? Absolutely not! We like to make our fees and interest rate perfectly clear when we send you our loan offers. This ensures the customer knows all the important details upfront, can make a clear decision, and enjoys a surprise-free experience.

Imagine you owned a loans company. You know that the cost of living is already going up as it is, and people are needing reliable fast cash loans now more than ever. Think it would be a good idea to fill your policies with loads of hidden traps that hurt your customers? No, we don’t either. We absolutely believe in being as forthcoming with information as we can throughout the process. Tricky deals don’t cut it anymore. We hate them just as much as you do, so we avoid them as much as we can!

Myth 3: Payday loans are for gamblers and the unemployed

We actually always advise against the use of payday loans for anything that isn’t a necessary purchase. Gambling is certainly one of the most dangerous ways to use the money from a short-term loan. People on very low or no income don’t make it past our application process unless they are receiving a steady income from welfare services like Centrelink.     

If you tell us you need the loan to buy new personal items like necessary shopping sprees, holidays, or home improvements, we’ll always remind you that payday loans are only suitable for emergencies. Need to replace the boiler or don’t have enough to buy groceries for the next couple of weeks? These are the kinds of situations we’d be more than happy to help with.

Myth 4: Short-term loans companies jump at the chance to apply late fees

Some loans companies can be. Just like with all credit cards, payday loans are designed to be paid back as soon as possible, so if you miss your repayment dates, late fees are supposed to be applied. At Cigno, we like to take a far more progressive approach to late payments.

The main thing we want to do is help ensure your loan experience is a good one. Get in touch with us as soon as you think you might be late paying and we’ll do everything we can to help rearrange your repayment schedule to suit your needs.

The worst thing you can do is ignore your repayments and then ignore contact with your loan provider. This is a sure way to end up owing more than necessary. The very best thing you can do is communicate with us as early as possible so that we can work with you to find a resolution.

These are 4 of the biggest myths out there surrounding payday loans. We hope this quick list has helped reshape your thoughts on these short-term, fast payout cash solutions.

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Disclaimer: Please be aware that Cigno Loans’ articles do not replace advice from an accountant or financial advisor. All information provided is intended to be used as a guide only, as it does not take into account your personal financial situation or needs. If you require assistance, it is recommended that you consult a licensed financial or tax advisor.


Ordered by the Federal Court of Australia

The Federal Court of Australia has found that Cigno Australia Pty Ltd (Cigno Australia) and BSF Solutions Pty Ltd (BSF Solutions) have breached the law by engaging in unlicensed credit activity and charging prohibited fees.

In the period from July 2022 to 3 October 2023, over 100,000 consumers have been lent a total of $34 million, and charged fees of over $70 million, under the ‘No Upfront Charge Loan Model’ operated by BSF Solutions and Cigno Australia. At no time has either BSF Solutions or Cigno Australia held an Australian Credit Licence.

The Court also found that Mark Swanepoel (director of Cigno Australia) and Brenton James Harrison (director of BSF Solutions) were involved in these breaches of the law.

With effect from 24 May 2024, the Court has granted permanent injunctions preventing Cigno Australia and BSF Solutions from:

  • demanding, receiving or accepting fees or charges, including amounts of loan principal, from consumers in relation to credit provided under the ‘No Upfront Charge Model’; and
  • engaging in further credit activity pursuant to the ‘No Upfront Charge Loan Model’, including by entering into new agreements with consumers, for so long as they do not hold an Australian Credit Licence.

Cigno Australia was ordered by the Court to, by 5th July 2024, send written communications to consumers who between July 2022 and December 2022 entered into agreements with Cigno Australia and BSF Solutions under the ‘No Upfront Charge Loan Model’.

The Court will later determine whether (among other things) Cigno Australia and Mark Swanepoel ought to pay a pecuniary penalty in respect of this conduct, and whether Mark Swanepoel should be restrained from carrying on a business engaging in credit activity.

Cigno Australia, BSF Solutions, Mr Swanepoel and Mr Harrison intend to appeal the decision of the Court and have filed an application for leave to appeal. If the appeal is successful, some or all of the orders of the Federal Court of Australia may be set aside.

Where can you get more information?

Where to go for further support

You can access legal advice in your state at: Free legal advice –

If you are experiencing trouble with debt, or money worries in general, contact:

  • the National Debt Helpline on 1800 007 007 or online chat (9:30am to 4.30pm, Monday to Friday).

If you need someone to talk to, contact:

  • Lifeline on 13 11 14 (24 hours) or their crisis support online chat or
  • Beyond Blue on 1300 22 46 36 (24 hours) or their webchat