Main Reasons Your Payday Loan Application Is Denied
To receive funding, you must be a US citizen or an official resident who is at least 18 years old, have income, a bank account, proof of identity, and a social security number.
Payday loans are one of the most popular types of emergency financing. This loan has minimum eligibility criteria so it is the most suitable option for most Americans. However, despite the high percentage of approval, some borrowers continue to be rejected.
Often the main reason for refusal is high risks, as payday lenders believe that a potential borrower will not be able to repay the debt, but there are other reasons. If you want to know why your Payday Loan application is being rejected and you want to change it, keep reading.
Main Reasons Your Payday Loan Application Is Rejected
Most likely you know that one of the main factors influencing the approval of your application is a regular monthly source of income. Thus, if you currently do not have a regular income, it is likely that your application for funding will be rejected. If you have income but your application is rejected, it is also likely that your income is too low. Most lenders have a minimum income requirement, most commonly $1,000.
Read more: $800 Loan from Direct Payday Lenders
Even though Payday Loans are marketed as the most affordable type of hardship financing for people with bad credit, some lenders are still looking at your credit. If you have a bad credit history, then most likely this will not prevent you from getting a loan. However, in the event that you have had bankruptcy, this may affect Payday Loan approval.
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No bank account.
While some lenders will approve funding applications even without a bank account, finding one will not be easy. Most often, the loan amount is transferred directly to the borrower's bank account, so it is necessary for the approval of the application. Moreover, some lenders may pay attention to your bank statements before approval. So, if the lender sees that you have missed payments in the past, this can also be a reason for rejection.
Read more: Payday Loans with No Checking Account
Citizenship and age.
In order to apply and receive funding, you must be a US citizen or an official resident. Thus, if you are not a US resident and are here on a student or work visa, then most likely you will not be able to receive this type of funding. This is one of the main criteria when you apply for a Payday Loan. Another common reason for rejection is age. Most often, you must be at least 18 years of age to apply for a loan, however this requirement may vary depending on state laws. In some states, you must be 19 or even 21 to be approved.
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You already have a Payday Loan.
Another common reason for refusal is the existence of another Payday Loan. In this case, the lenders are not sure that you will be able to repay the loan when you are still in debt on the previous one. It is also worth noting that in some states it is illegal to have multiple Payday Loans. Therefore, pay attention to state laws before applying.
Read more: How to find out if you owe payday loans?
Should I Reapply If My Application Was Denied?
More often than not, after the first rejection of funding, most borrowers think it's a good idea to submit another funding application to get out of their troubles. However, in this situation, this will not be the best solution, since application you submit is reflected in your loan file, regardless of whether it was approved.
Thus, if you submit multiple applications for funding within a short period of time, it will not show you well. On the contrary, it will be clear that you are in desperate need of money. Moreover, it can also negatively affect your credit history. Credit history often affects whether you can get financing, so risking it is far from a good idea.
Read more: Second Chance Payday Loans
What Are My Options If My Application Is Denied?
If your application was rejected and the experts do not recommend submitting it again, then most likely you do not understand what to do. However, now there are a large number of options that you can still pay attention to in a difficult life situation:
- Reach out to family and friends. Of course, the first thing you should do if you need only a small amount is to ask family and friends for help. Most often, they will be able to provide you with the amount you need if you explain that you are in a difficult life situation.
- Ask for an advance at work. Another option is to explain to your employer that you urgently need funds to meet your emergency needs.
- Contact a credit union. Of course, in addition to Payday Loans, you can also look at credit unions that are most likely to be able to help you. Moreover, they don't charge an early repayment fee.
- Use a Pawnshop Loan. Getting this type of funding is as easy as it gets as you don't have to meet almost any eligibility criteria. However, you will need to provide a valuable item as collateral.
- Rent out a room in the house. If there is a free room in your house or apartment, then this will be the easiest way to get financing. You can rent out a room and get extra funding every month without any effort.
- Sell things you don't need. Every person at home has unnecessary things such as an old lawn mower, unwanted electronics, jewelry and other valuable items. You can sell them and get extra cash.