Top Ten Reasons A Payday Loan Is Denied

Top Ten Reasons a Payday Loan is Denied

Approval for a payday loan is usually done during the same business day as the application process, and most people receive the borrowed funds within 24 hours. This is because most lending companies do not require a lot of personal information and do not run a credit check before issuing a loan. However, there are occasions when an application for a payday loan is denied. Following are ten of the most common reasons for such a denial.

1. The applicant cannot provide proof of employment. Payday loans are given based on the knowledge that the individual will be receiving a paycheck that will include enough funds to payback the loan amount. If no employment can be verified, the lending company cannot be sure to receive payment.

2. The applicant has filed for bankruptcy within the past year. It is true that lenders do not run credit checks, but they still want to be certain that a person will be capable of fulfilling monetary obligations. Bankruptcy is basically a legal statement that a person is unable to support himself financially, and most companies believe that it takes more than one year to recover from such financial troubles.

3. The applicant has not been employed the length of time required by the particular lender. Most lending companies prefer that a potential borrower has been at their present place of employment for at least six months, However, there are some lending companies that only require three months on the job, so a person may have to search for these companies.

4. The applicant's checking account is too new to show as active. Generally it is preferred that a checking account has been open for at least three months and is in good standing.

5. The applicant does not meet the required monthly net income. Most companies require that a potential borrower's income be at least $1000 a month. If a person make less money than this, most lenders question the person's ability to pay back the loan money and are hesitant to lend.

6. The applicant has a great deal of overdraft fees or insufficient funds charges in his checking account. This will immediately serve as a warning to lending companies. They will assume that this person is not dependable and will not be able to pay back any loan that is given.

7. The applicant currently has unpaid payday loans or returned checks. Outstanding loans will also make a lender question a personal ability to pay back a loan.

8. The identity of the applicant cannot be verified. This happens if a potential borrower tries to use a fake name or invalid personal information. Lenders will obviously not provide a loan to an applicant who cannot be verified.

9. The lending company is unable to verify banking information. This happens if a bank is no longer in existence or if inaccurate information is provided.

10. The applicant is paid once a month. Payday loans are intended to be short term loans that are repaid within a fixed time frame. This time frame is generally within 18 days, and some applicants who are paid monthly are unable to meet this requirement.

If you apply for a payday loan and receive a denial, ask for detailed information regarding the reason. It may be that you completed a portion of the application incorrectly, which you can correct and then reapply. However, if you find that you do not qualify for a payday loan with a particular company, take some time to research other potential lenders as many have varying requirements.