Payday loans are short-term, same-day processing loans obtained by borrowers with needs that can’t wait till their next payday. They are quite easy to qualify for, as they may be gotten even without collateral or a cosigner. You can even apply for payday loans without hard credit evaluation if you meet its general requirements. So why do people still get denied a payday loan then?
Possible Loan Application Denial Causes
Check out these reasons and you may just find out what to correct when next you apply for one:
You Do Not Satisfy The Eligibility Requirements
To be considered for a loan in the first place, you must satisfy basic loan eligibility requirements. Some of them are that you must be a US citizen of at least 18 years of age with valid US residency. Some lenders even peg the minimum age limit at 21 due to different state regulations. You can’t qualify if you do not meet these.
Gambling Activities
There’s a widely understood notion that gamblers are not financially stable and have poor money management skills. If upon scrutiny of your accounts, the lender notices multiple regular payments to online gambling sites, they may be wary of approving you for a loan.
Multiple Overdrafts On File
A lender may reject your application if your bank statement reveals you may have made too many overdrafts from your account. It fuels the idea you may not be so financially stable, and the lender begins to second-guess your ability to afford a loan.
Low Income
It is good to have a steady source of income, but it won’t help if your income is not able to cover the cost of the loan. There are no strict requirements regarding income, although the market average is ranging from $800 to $1,000 with most lenders. In most cases, the requested loan amount should match your income in order to get approved.
Cash Payments
If all of your sources of income, or most of the income, are based on cash, it might be difficult for the lender to verify instead of via direct deposit. The same issue applies if you are paid via cryptocurrency. You will have a higher chance of qualifying for a loan if you get paid via direct deposit.
Bankruptcy Claims
Lenders generally use your financial situation to assess your creditworthiness. If your financial record shows you’ve filed for bankruptcy at least once in the last seven years, you’re definitely deemed high risk and may be rejected.
Obtain Alter Financial Solutions
Borrow From Online Loan Broker
Don’t fret if you just got denied for a loan, there are other options available. Reputable online brokers like iPaydayLoans, WeLoans, CocoLoan, and CashAdvance can help. These loan platforms work with reliable lenders that are experienced in providing loan services for people with various financial situations, meaning that the possibility of getting your loan request approved by them is way higher than reaching out to direct lenders by yourself.
Get Support From Friends And Loved One
A friend or family relative may be willing to help you with your cash needs. The timeline for these kinds of loans is usually very flexible, and the interest rates are little or even 0%. Just be sure to draw up a written agreement or honor your agreement if unwritten.
Apply For Credit Union Loans
Credit unions are self-help unions formed by a group of people who pool their savings to provide each other with some money at a low-interest rate. You can apply for a credit union loan only if you are a member of one. The total cost of credit union loans is significantly lower than those of payday loans.