What Are the Basic Requirements to Qualify for a Payday Loan?

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A payday loan is a small personal loan intended to cover temporary cash flow shortages. The loans, which are available from several sources, are very helpful when you need extra money in a pinch. However, before you apply for one, it is important to understand what they entail. This should help you know whether you will qualify for the terms of the loan.

There is a list of online payday lenders to give you fast cash as long as you qualify. Therefore, you will always find help when you are in a fix and you desperately need financial help. Remember that it is only wise to go for a payday loan if you are really in need of it. 

Do you qualify for a payday loan?

Not everyone qualifies to apply for a payday loan. However, it is easier to acquire a payday loan than a traditional bank loan. To qualify for a payday loan, here is what you should know:

  • You must be 18 years of age or older
  • Some lenders will require you to have a verifiable bank account.
  • You must also have an active and valid checking account in your name at a federally insured financial institution.
  • If you plan to use a loan from a payday lender, you will need to provide proof of steady income.

Many types of employment are acceptable as long as your source of income is constant and regular. You can find out more information about the eligibility requirements for specific lenders. Do this by calling their customer service lines or visiting their websites. Some lending companies will not require that you have direct deposit, but they may require that you be able to write a check to make your payment.

If you have bad credit, do not worry. You can still qualify for a payday loan. Some lenders specialize in lending to people with poor credit. In that case, they will not turn down your application based on your credit score alone. However, you should keep in mind that they might require you to pay higher rates than what is standard. This is due to the high risk you pose to them.

Bear in mind that some lenders will accept only U.S.-based employment. However, others are open to applicants who work outside the country. Some even allow students with co-signers on their loans. Therefore, your location and terms of engagement matter.

How Much Can You Borrow?

The amount of money you can borrow with a payday advance depends on your income. This may be your salary, bonuses and commissions, rental income or alimony. Most lenders will not lend more than the total of your monthly take-home pay. You should plan to limit yourself to $400 or $500 if possible.

When choosing a company, ask the maximum amount they will let you borrow. You should also consider how many consecutive pay periods it might take to repay the loan. Again, check on whether there are any additional charges or fees for delayed payments or loan defaults.

Points to note!

Know all the details around payday loans before making any application. It is important for you lest you find yourself in a cycle of debt. Therefore, it is important to know that:

  • Lenders do not verify your personal information such as social security number, date of birth and address. However, you should ask what types of information they do verify. Some lenders might request a checking account, bank account or credit card number.
  • Payday lenders can legally charge up to 21% of the total amount of the loan in some states. However, they can add on additional charges or fees for late payments or non-payment.

This means that if you borrow $200 at a rate of fifteen per cent, you will have to repay the loan within 14 days with an extra fee of either $30 or 15%. Some lenders may charge even more than 16% of the amount borrowed.

To be qualified for a payday loan, you will need to meet specific minimum requirements set by your state and lender. However, regardless of who provides you with a payday loan, you should always make sure that you understand the terms and conditions behind your credit agreement before signing on the dotted line.



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