The Top 9 Reasons Why Your Payday Loan May Be Denied

When you are in need of a quick cash injection in form of a pay day loan, loan approval is usually a simple process for the most part, you should receive the cash during the same business day you apply or within 24 hours. This is because most of these payday lending companies do not require very much personal information. They do not not run credit checks before issuing a payday loan. However, there are on occasion when applications for a payday loan is actually denied.

The Following Are The Nine Most Common Reasons Why Your PayDay Loan Is Denied
1. The first and most important reason for denial is that the applicant cannot provide valid proof of employment. A payday loan is approved based on the guarantee that the individual applicant will be receiving some type of paycheck that will cover or include enough funds to be able to payback the loan. If no current employment cannot be verified, the payday lending company will not give a loan based on it’s not sure they can receive the loan payment back.

2. The applicant who has applied for a payday loan has in the past filed for bankruptcy, this within the past year. Although these lenders generally do not bother to run credit checks, they still obviously want to be assured that the person is capable of repaying the loan back. Bankruptcy is a red flag as it states that person is basically unable to support him or herself financially, and usually it takes more than 12 months to fully recover from such financial troubles.

3. The applicant for a pay day loan has not been employed the length or amount of time as required by a particular lender. Most payday lending companies prefer the borrower has been employed for at least the past six months. There are some however, that require only three months on the job, so the trick is to obviously search for these companies.

4. The applicant for the payday loan does not have a checking account or it is too new. Generally, the checking account is required to be open for at least three months and should be in good standing.

5. The applicant will be denied if he/she does not meet the monthly net income requirements. Most of these payday lending companies require a borrower’s income must be at least $1000 a month. If a person earns less than that amount, the person’s ability to pay them back comes into question.


6. The applicant consistently has check overdraft fees or has insufficient fund charges in his bank checking account. This will immediately bring up a red flag to lending companies. They will just assume that this person is not responsible or dependable enough and thus will not be able to pay back the loan that is applied for.

7. The applicant currently has a previous outstanding unpaid payday loan or has a returned check, attempting to pay them back. Any type of outstanding loans will also make a payday lender wonder if the person has the ability to pay back the loan.

8. Loans may be denied if the identity of the loan applicant cannot be verified. This often occurs if a borrower tries to use fake id or invalid personal information. Lenders will obviously refuse loans to any applicant who cannot be verified.

9. Finally, an applicants loan may be denied if he/she is paid on a monthly basis or just once a month. Payday loans are designed and intended to be short term solutions that are required to be repaid within a short fixed time frame. This time frame is usually within 18 days or shorter, and if some applicants are paid monthly, they are then unable to meet the payback requirements.

If you happen to apply for a payday loan and are denied, ask for a detailed explanation on why. It may be as simple as you completed a part of the application incorrectly, in which you can just correct the error and then reapply. However, if you find out that you do not or cannot qualify for a payday loan with a particular loan company, you can always research and find other potential lenders as their requirements may be different.

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