Reasons to be denied a payday loan

Payday loans are popular with average Americans facing financial difficulties. Although lenders approve most applications, no providers offer a 100% guarantee. As shocking as it may sound, some applicants are denied a payday loan. Cash advances focus on different eligibility criteria compared to personal loans, for instance. Mark Sharp, a financial advisor, listed the main reasons based on cases from his practice.

There are two main reasons a payday lender may reject your application are a bad debt-to-income ratio and not meeting the eligibility criteria. Qualifying is a matter of meeting a set of basic requirements, such as being at least 18 years old, having US citizenship or permanent residence status, having an active bank account, etc. Payday lenders usually display the requirements in their offices and on their websites. If you don't qualify, you cannot access cash advance loans. State laws dictate the main lending rules in Oregon, and lenders cannot make exceptions. However, different lenders may have additional requirements. For instance, some loan providers may ask for you to fax over all the documents you need. Others will accept copies that you can with your smartphone and send over online. Consequently, if one lender denies you a payday loan because you don't meet their additional requirements, you can try your luck with another company. Anthony, one of my clients, was denied a payday loan from 4 different providers and finally got accepted when applying online. I helped him select the last candidate, and it turned out the others just had more requirements, which is why Tony didn't qualify.

Being accepted depends on your income. For instance, if you don't earn enough to repay your debt from your next paycheck, you will be denied an online payday loan. A client of mine, Lana, had two jobs and yet couldn't get a cash advance because her total income was lower than $800. A year later, her income almost doubled, and she would have qualified had she needed a loan.

Lenders will carefully look into your current debts and assess your repayment ability. Borrowers who can't prove their income will also be denied a payday loan. Ideally, you should be employed for at least three months and use your pay stubs as income proof. Depending on the lender, you may also be approved if you are on social benefits or self-employed. One of my clients was on a disability benefit, and he had no issue accessing a cash advance when needed. However, he would borrow from the same lender, who accepted proof of income other than from one's employment.

If you have any outstanding payday loans, you will most likely not receive a new loan. First of all, most states forbid having more than one payday loan per borrower at a time. Secondly, lending to you becomes riskier for the lender, decreasing your chances of approval.

Use payday loans sparingly and do your research before signing a loan agreement to keep on the safe side.