A payday loan is a short term, low balance, high-interest loan. The funds can be borrowed in a post-dated check that is usually cashed on the borrower’s upcoming payday. Payday loans generally have very limited loan qualification requirements and are designed to be easy and quick.
The requirements differ by lender but generally, you will need the following to apply. Be 18 years or older, valid photo ID, open and active bank account, a steady source of income, and a working phone number.
Although, specific requirements may also vary by the lender it is smart to be armed with the following when applying for a payday loan.
Personal information such as
- valid ID
- home address
- valid phone number, and
- email address.
Income information such as
- pay cycle frequency
- income type
- employee name
- address & phone
- net & gross income amounts.
Bank Account Information
Payment options will also vary by lender and how you apply for the loan but you will need one of the following at the minimum.
- Checking account
- Institution and routing number
Unfortunately, most payday lenders may not be able to lend to those whose employment contract is due to terminate before the end of the month or who are currently unemployed. To get approval for a loan, you need to confirm that you will receive a paycheck every month from one source or another. Part of the legal requirement is that you need to confirm your identity and residential address.
Bad Credit Ratings
Individuals with bad credit ratings can apply for payday loans as they are more likely to get accepted than any other forms of credit. The only relevant factor a lender will look at is your present financial situation.
This is because payday loans are short term loans and the loan companies usually base the agreement on the paycheck you receive on a monthly basis rather than the track record of repaying loans. Generally, a high proportion of applicants get accepted – this means many people are eligible for a payday loan.
There is no fee associated with applying for a payday loan so there is no harm in filling out a form to see whether or not you will get accepted. There is every chance you will be, provided you meet the terms described.
How Much Can I Borrow?
Qualifying loan amounts vary and it depends on the payday direct lender and the borrower’s income. It is important to note that most states have laws guiding the maximum amount you can borrow.
There are some states that limit the borrower’s ability to have multiple outstanding payday loans. When thinking of a payday loan, loan requirements should not be the only consideration. It is uncommon for payday loans to exceed 500% or even 1000% in terms of annual percentage rates or APR.
As an expensive alternative, treat Payday Loans with care. Although regulations and business models limit the duration and size of the loans.