Short-term installment loans, also known as Payday Loans must be repaid, plus any applicable fees, on your next payday. They don’t usually require a credit check.
Instead, lenders review your bank account to ensure a steady source of income. If there has been an extensive history of bounced checks or overdrafts, lenders may deny your application for financing.
1. You Are Unemployed
Payday cash loans often carry high service fees with triple-digit APRs and short repayment periods, making them a last resort. Unemployed applicants may find іt more difficult tо secure approval for these loans since lenders typically look at your income and employment history differently from someone who currently holds down employment.
Methods available tо increase your chances оf approval include providing multiple income sources and outlining how you plan tо repay debt іn an expeditious fashion. You should also seek lenders with more lenient criteria; and, іf finances are tight, consider working out an affordable payment plan with creditors and seeking help from community organizations offering financial assistance.
2. You Are Self-Employed
Self-employed applicants may find it more challenging to secure payday loans as lenders tend to prefer those with regular and steady income streams. When considering approval for such a loan, lenders typically require proof such as profit and loss statements, tax returns or any other documents showing steady earnings over time.
For freelancers looking for quick cash, consider applying for a personal loan or visiting a pawn shop that provides loans based on collateral instead of credit checks. Both options may be easier and less expensive than payday loans while helping build your credit history; repaying these on time could even qualify you for additional loans in the future.
3. You Are a Military Member
Active-duty service members typically make more money than civilian counterparts; yet, they still make tempting targets for predatory lenders who provide payday loans with exorbitant interest rates and fees that trap military members in a cycle of debt.
Before the Military Lending Act was put into place, a Department of Defense study had shown that predatory lending had affected 17% of military personnel. With its strict restrictions against allotment allotments, vehicle titles or tax refunds as collateral for loans secured with credit-related rates up to 36% and loans secured through allotment allotment or title were banned altogether under MLA regulations.
Langford recommends that service members who are experiencing financial difficulty first consult the military aid society on their installation for financial counseling and help developing budgets. These organizations offer professional financial guidance.
4. You Are Underage
Underage individuals refers to anyone who has not reached the legal age of majority in their jurisdiction; it can also refer to any age limits such as drinking, voting or driving age limits. Most lenders prohibit anyone under 18 from applying for payday loans quickly.
If you are underage and in need of emergency cash, your best option would be for someone else to co sign your loan so that legally responsible parties won’t deny you due to age considerations. Otherwise, wait until 18 so you have more options with better credit ratings.
5. You Have Other Loans
Payday loans are short-term unsecured personal loans secured against your checking account that typically come with high interest rates, making them popular among financially vulnerable people who live paycheck to paycheck.
Some states impose different regulations on payday lenders, which may impede the approval process. Such regulations can include interest rate caps and restrictions that help protect borrowers against predatory lending practices.
Your credit history can have an effect on whether or not you’re approved for a payday loan. Lenders will consider factors like debt-to-income ratio, number of hard and soft inquiries on Experian credit report and existing debt as potential indicators of risk; more debt means higher potential risk as an applicant.
6. You Are a Creditor
Creditors and lenders rely on your credit report to approve or deny you for loans and services, including payday lenders who typically do not conduct hard credit inquiries; however, if you miss repayment on time your debt could go into collections which can stay on your file for seven years and hinder future approval for new loans or credit cards.
To avoid becoming trapped in a cycle of debt, speak with both your lender and credit counselor for advice and an affordable payment plan that fits within your budget. They may even help establish an emergency fund.
