4 Common Factors that Impact the Payday Loan Decision

The loan decision on a payday loan is different than any other type of loan in the market. If you need a payday loan, it could help to know what the lender is going to look at to decide if you will be approved. Here are a few common factors that impact the payday loan decision.

1. Employment

With a traditional loan, the most important factor in approving you for a loan is your credit score. Traditional lenders like to know that you have a good credit history, however with payday loans, the lenders most likely will not even pull your credit history. They are going to base the majority of their decision on whether or not you have a job. This is great news for those that do not have a good credit history, because this may be the only place that they can get a short-term loan. Those that do not have a job, will most likely not be able to be approved for a payday loan. In order for a payday loan to work, there has to be a payday to loan against.

2. Income Level

In addition to having a job, the lender will want to make sure that you meet certain income requirements. Not every job is going to qualify you for a payday loan. However, the income requirements are usually on the low end. For example, they might require you to make at least $800 per month in order to qualify for a small loan. The size of the loan that you request will have an impact on how much money you have to make to qualify.

3. Past Experience

Another important criteria that they look at is your past experience with payday loans. Many people that get payday loans are in the habit of getting multiple payday loans. They have usually done it several times because they are constantly in need of emergency cash. When you take out many payday loans, there is a good chance that you will have had problems repaying one at some point. With the high interest rates that come with payday loans, it can be very difficult to pay them back. With this in mind, the lender will look through their records to see if you have ever borrowed from them before. If you had trouble with them in the past, they will usually not approve you for another payday loan.

4. Size of the Loan

When you are applying for a payday loan, another criteria that they are going to look at is the size of the loan that you are requesting. The bigger the amount of loan that you request, the more difficult it is to get approved for. If you want a large loan, they will want to make sure that all of the other factors check out first. 

Related Articles