Payday lending is often seen as the lender of last resort. The issue is often because of the difficult situations that drive people to payday lenders. The negative association also leads many to be afraid to apply for a payday loan, though they have few other options. It doesn’t have to be this way. There are steps you can take to take the pain out of the payday lending process.
Research the Rules before You Apply
Understand the rules before you apply for a payday loan. This could save you the pain and embarrassment of rejection. For example, you may be declined for a payday loan if you apply on a website that is located in another state. The lenders may not be allowed to lend to someone outside of the state, or that state may have lower lending limits than the amount that you asked for.
One solution is to apply for a loan with a national payday lender. They’ll be able to offer a loan that meets your state’s laws.
Also read the lender’s terms of service and other requirements before you apply. Then you won’t apply for a loan that will be rejected because you’re too young, have an income too low or a debt to income ratio that is too high to qualify. In most jurisdictions, you’ll be denied if your only source of income is welfare benefits, and you’ll be rejected if you are unemployed. If you’re paid in cash, you’ll probably be rejected because they can’t verify your income.
Verify what documentation is required to qualify for the loan and how you prove your identity. Then you won’t have to make multiple trips with your driver’s license and a pay stub because you forgot your Social Security card. Or you’ll be able to weed out lenders who require a checking account if you don’t have one. Conversely, you could set up a checking account before you apply for the loan.
Work with a Caring Lender
The payday lending industry has a bad rap because of the few bad apples. There are other lenders that treat borrowers like just another client, processing people as quickly as possible. One way to take the pain out of payday lending is to work with a lender who values their clients. Give your business to someone who won’t make you go through two pounds of paperwork or harass you. You can learn about the client’s reputation through online reviews on third party websites as well as word of mouth referrals.
If you’ve recently been through a bankruptcy or just started a new job, some lenders will refuse to work with you. Fortunately, others will. Do your research for those that would consider you as a client if you’ve had a bankruptcy in the past year or don’t have a regular employment history yet.
Manage Your Money Carefully
Pay day loans have the advantage of not being dependent on your credit score. However, eligibility for the loan and its associated fees depends on how well you manage your money. For example, if you have too many overdrafts on your bank account, they may not issue the loan. If your payment to the lender on your next payday bounces, you could be hit with high fees that make it almost impossible to manage the next pay cycle.