Up to 45% of all payday loan borrowers have limited access to credit cards and lines of credit and use the funds for unexpected emergencies. Payday loans provide a fast and easy-to-get source of money when it’s needed.
Also referred to as a cash advance, payday loans are usually short-term, low-balance options. If you are interested in applying for a payday loan, it is smart to get to know the payday loan requirements first.
Knowing the requirements will help you get the funds you need.
1. Report All Income Accurately
To receive a payday loan, you must have a minimum monthly income. The amount varies from one lender to another, so it is a good idea to find out what this is before applying.
Some lenders require a borrower to have worked at their current job for at least three months.
Never exaggerate your monthly income. This isn’t going to help. Also, don’t add “freelance work” to try to inflate the amount you make each month, either.
Usually, lenders will only care about the money made from permanent jobs. Freelancing work or part-time employment aren’t traditionally considered because these are typically unsteady and often unreliable income sources.
The takeaway here is to never lie about what you make if you want to have your loan approved.
2. Take a Look at Your Credit Rating
Along with your income, some (not all) payday lenders will look at your credit rating. Your credit file will show your borrowing history.
It is smart to make sure the information found is accurate. A mistake may impact your application.
3. Consider Your Debt to Income Ratio
When you request a loan, you should compare the amount you require to the income you receive each month. For example, if you have a monthly income of CAN$ 1,000, a lender isn’t going to approve a loan in the amount of CAN$ 1,000.
Your likelihood of being approved for a loan will improve if the amount you request is just a fraction of your monthly income. For example, if you make CAN$ 1,000 a month, seeking CAN$ 300 to CAN$ 500 is smart. The lower the amount you request, the more likely you will be to get approved.
4. Submit the Required Documentation
The loan approval process may be delayed or halted entirely if you fail to provide the requested documents on time. Most lenders like a borrower who is easy to work with.
This means if a lender requests additional documentation, you should provide it to them on time. Also, make sure you read the loan application carefully and that you attach everything requested before you submit your application.
5. Pay Off Any Existing Loans
You need to make sure you don’t have other payday loans still active when applying for further funding. Even if the current payday lender doesn’t find out about these, it can put you in a tough financial situation.
Also, it is never smart to take out one loan to pay off another one. This can lead to a never-ending cycle.
6. Find the Right Lender
There are a lot of payday lenders to choose from. It is up to you to find the one that best meets your needs and situation.
It is a good idea to do plenty of research into the available options before choosing one. You may even want to ask people you know about the payday lenders they have used in the past.
Also, if you don’t put time and effort into finding the right lender for your needs, it may result in you paying interest rates that are higher than necessary. When comparing lenders, always be sure to look at their terms first.
7. Consider the Repayment Options
Many lenders have flexible repayment terms that make taking out a loan and repaying it easy. Others don’t.
Because of how many businesses are in this industry, it is up to you to determine the type of lender you are dealing with. This goes along with finding the right lender, but it is so important that it deserves its own category.
Be sure to understand the repayment terms. This includes when you have to repay, what you must repay (premium plus interest), late payment fees, and if payment extensions are possible.
Remember, the options that a lender offers you will vary, so talking with a few lenders before choosing one is highly recommended. This will help you find the options that have the best terms.
Payday Loan Requirements: Now You Know
There is no question that payday loans can offer you an array of benefits, especially when you need money right now or quickly. The key to making the most of this type of loan is to get to know the options, understand the payday loan requirements, and find the right lender.
When it comes to getting the financial help you need, you can count on us to deliver quality, accurate advice that helps you make informed decisions. If you would like to know more about payday loans, or any other related topic, be sure to check out some of our other blogs. We update our content regularly, so visit often to get the latest information on trending topics.