The Reasons For Being Rejected a Payday Loan
If you’re looking to fill a cash shortfall, a payday loan is obviously one of your go-to options. And while dealing with the cash shortfall isn’t tough enough, having your loan application rejected is even more painful — and it happens to many borrowers. Lenders often have minimum qualifications that users must pass to get approved for a loan.
If a lender turns down your payday loan application, they are required to provide a list of reasons for their decision or a notice to get the main reasons. And while you may not know the next steps after a rejection, there are several steps you can take to improve your odds for future applications. Besides, you could get approved for a payday loan from a different lender. Here are some of the common reasons for being rejected for a payday loan:
Unstable Income
Most payday lenders have minimum income requirements you must meet to get approved for a loan. On top of this, lenders want to see a stable and consistent income on a borrower’s loan application. If you don’t receive regular income from your job, are unemployed, or take on seasonal work, your loan application could be rejected. Besides, different pay stubs, recently changed occupations, or freelance work from multiple employers could create a snag in income calculations. If you have income fluctuations on your statement, your lender may be willing to look at your tax returns to compare incomes for similar periods.
Minimum Application Requirements Not Met
Similar to other personal loans, lenders have minimum qualification requirements that borrowers must meet to be approved for payday loans. At the most basic, you must be of the right age, have a bank account, and meet the income threshold. Lenders will reject your application if you don’t pass the minimum threshold set to qualify for the loan. And while you won’t typically need to pass a credit check, some lenders may still look at your credit report when you apply for a loan and use it as grounds for approval or rejection.
Loan Applications To Multiple Lenders
A lender may perform a soft credit pull on your profile when you apply for a payday loan. However, lenders may have their own third-party database to check the number of loans you have at that time. If you have a loan application with more than a single lender, chances are that all the lenders you have applied to will reject your loan application. Remember, applying to multiple lenders doesn’t inherently increase your chances of being approved for a loan. Besides, many lenders don’t allow borrowers to have more than one payday loan at a time.
Missing Information on Your Application
A payday loan lender might automatically decline your loan application if key information or details are missing on your application. Different lenders will require different forms of paperwork, including income information, proof of identity, and collateral documentation when needed. The lack of any of this information will result in an automatic rejection of your application. Be sure to read your application fine print carefully before submitting it and provide any supporting documentation your lender requires.
Overdrafts on Your Bank Account
Lenders will often require a copy of your latest bank statement when you lodge a payday loan application. A history of overdrafts or dishonored payments to your creditor due to an insufficient balance could portray you as a risky borrower to the lender.
You Have a History of Bankruptcy
You may have difficulties getting your payday loan application approved if you have filed for bankruptcy in the last 7 years. Often times, filing for bankruptcy puts your ability to repay debts in question, and payday loans are no exception. You may be deemed too risky a borrower if you have a history of filing for bankruptcy.
Ultimately, a lender will mainly reject your payday loan application if they think you can’t afford to pay back the loan. And while this doesn’t mean that you’re not financially responsible, you may still get approved for a payday loan after an approved application. Be sure to review your loan application to ensure you’re not missing any information that may lower your odds of approval.
