Payday loans also named as cash advance or check advance loans are low balance and short term loans.
These loans are fast and easy and come with very less qualification that is necessary for eligibility. They serve the purpose of helping individuals avail of some urgent cash until the next payday.
What Qualifications Are Necessary To Get A Payday Loan?
According to the Consumer Financial Protection Bureau if a borrower quickly shows that he meets all the requirements then the process of qualification, as well as loan application, will be as quick as 10 minutes. In most cases while taking a payday loan, a borrower writes up a check for the amount of loan taken along with a fee for lending, and then the lender holds it until a scheduled due date.
When the loan is due, the borrower will repay it, let the lender cash the check that is post-dated, or write another check that is also post-dated for covering the loan amount. You should try to repay it at the scheduled date in order to avoid any financial trouble as each time you will extend the loan due date, more fees will be applied by your lender on the payday loan.
The qualifying amount of the loan will be varied on the basis of the income of the borrower and the lender. But there are some laws that are established in some states regarding the maximum amount that can be availed from a payday loan. Some of the states also limit the borrower’s ability to have several outstanding loans thus preventing them to borrow large loan amounts at a high rate of interest. Depending on the state law loan amounts will vary from $50 to $1000.
A loan requirement is never the only consideration if you think of taking a payday loan. If you take into account the Annual Percentage Rate, it is never uncommon for these loans to go over 500% or 1000%.
Business models as well as regulations do limit these loans’ size and term, but payday loans must be availed with a lot of care. Some of the states are having laws that regulate the amount the lenders are able to lend and also charge for the payday loan they lend. Some states where payday loans are banned; there the lenders are often seen to get around these regulations by entering into a partnership with some banks present in other states.
Lenders of payday loans sometimes do not check the borrower’s credit score. If you are financially unstable and do not have a good credit score, then also you will be qualifying for a payday loan. Many people in the US use payday loans every year. Most of those individuals do not maintain a good credit score or have any access to a savings account or credit card.
But just because your credit score is not checked, it does not imply that you will surely get the loan. You still need to meet all the other requirements for getting a payday loan. An individual who is going to get a payday loan will see varied qualifications depending on the payday lender that he will consider. But there are some universal standards that are very common. So generally you must be:
- Aged at least 18 years or the majority age from the state you are applying for the payday loan.
- A citizen of our country or permanent resident of our state.
- Able to provide proof of regular income.
- Holding a checking account.
- Having a valid email address along with phone number.
- A resident of any of the states where payday loans are legalized.
In order to be more specific, it is best to be ready with the following when you apply for a payday loan:
- Valid ID
- Residential address
- Valid contact number
- Proper email address (it is needed if you apply for an online payday loan)
- Frequency of pay cycle
- Type of income
- Name, address and contact number of employer
- The net and the gross amount of the income
Banking Account Details:
Payment options will be varying according to a lender and how you will apply for a loan. But at least you will require one of the following:
- According to checking account, routing as well as institution number or a debit form that is pre-authorized from your bank.
- Some payday loan locations can take a check that is post-dated.
Ensure that you are applying with a genuine lender by checking whether the lender has any kind of criteria for you to fulfill. Guaranteed loans are mostly a scam. You will always need to meet other requirements even if your credit score is not checked for getting a payday loan.