The Reasons for Being Rejected a Payday Loan
If you’re one of the many people who live paycheck to paycheck and haven’t set aside money for an emergency, you may find yourself in search of cash the next time your vehicle breaks down, or a family member has an urgent medical need. When faced with a financial emergency, many people turn to payday loans. Even though payday loans are easier to apply for than personal loans, approval is not guaranteed.
The primary explanation why lenders reject payday loan applications is that they believe you will not repay the loan. An extremely low score on your credit report, for example, may cause your payday loan application to be rejected. However, if your application was turned down, you could be able to get a payday loan from a different lender. Before applying, check out the most common reasons payday loans are denied to ensure you won’t be turned down the next time.
- You don’t earn enough income consistently: The federal government no longer requires payday loans to validate your ability to repay. However, certain lenders impose minimum wage thresholds, and some states continue to conduct affordability assessments. You can be denied if you do not have a salary or if your income is very low.
- You failed a credit check: Payday lenders may accept bad credit or may not run a hard credit check. However, some lenders can take a look at your credit score when you apply. Having a poor credit score does not automatically mean you will be refused credit. Certain negative marks, such as bankruptcies, can result in the denial of your payday loan application.
- You are without a bank account: It is possible to get a payday loan without a bank account, although it is difficult. The majority of lenders tend to deposit funds in your account and deduct the payment on the due date. And those who sell cash loans will look at your bank account before deciding whether to approve your application.
- Your bank account has overdrafts: Lenders can request a copy of your most recent bank statements when you apply for a payday loan online. Whether you have a history of dishonored loans — anytime a borrower tries to deduct funds from your account, and there isn’t enough money — you seem to be a concern to a lender.
- You are paid in cash: It is difficult to check income received in cash. This is because lenders normally check your bank statement to see if you have a consistent monthly income. Any employers can also demand that you be charged by direct deposit.
- You don’t pass the minimum age criteria: You must be 18 years old to take out a payday loan in most states. Some lenders have their age restrictions and may not lend to someone under the age of 21. Be sure you’re not too young to take out a loan before you apply.
Now that you know the potential reasons for denial of your payday loan application, you are well-prepared! Best of luck!