7 Common Reasons Payday Loans are Rejected
Going into debt for the purpose of investing or to solve a temporary liquidity problem is far from rare. It is absolutely not a sign of poor judgment or some other failure. However it certainly can indicate those things. Big successful businesses, investors, entrepreneurs, and ordinary people choose, advisedly, to accept debt for strategic reasons. However, not all of us can afford the most ordinary financial products. And sometimes, persons of modest means might benefit from taking a payday loan. Payday loans are notoriously risky. That means, if your finances are in need of a quick shot in the arm, it’s important to make the decision to take a payday loan very seriously.
7 Common Reasons Payday Loans are Rejected
There are many reasons why you could reject the possibility of taking a payday loan. But if you decided to go with it, there are also many reasons payday loans are rejected you should know.
The key is to make sure you can pay the loan off quickly and completely. If you’ve been turned down for a payday loan, it’s a sign that your finances are in need of medical-like attention. That said, here are 7 reasons payday loans are rejected.
1. Too Many Outstanding Payday Loans
This is one of the most vexing reasons payday loans are rejected. Payday loans are relatively small, compared to other loan packages. However it does not mean they are meant to be taken lightly. We’re not exactly sure how it happens but some people have gotten themselves caught up in a vicious cycle of living on payday loans. Mark our words when we say, this is bad news.
Some payday lenders are all too willing to extend loans to people who cannot afford it. Those who are turned down are the lucky ones, and they should be counting their blessings. This is why we’re writing this. If you try to take a loan that you cannot pay back you are your own worst enemy. And there are payday lenders who are more than happy to get you on that financial fishhook.
Payday lenders will turn folks down if they:
- Have other payday loans they are currently repaying
- Are using the payday loan to repay another payday loan
- Have taken out one or more payday loans in the last 90 days
If you encounter a payday lender who turns you down for having too many loans active already- you should bookmark their website. Write their address in your Rolodex and go back to them when your finances are in order because they are acting responsibly.
You can also find such lenders here, on Cashry. Reputable lenders are not easy to find, so it is great to have them all in one place and be able to check whether they want to give you a loan without a hard check.
2. You are Unemployed
Okay, this is pretty much a no brainer. Any financial service business has got to assess every person they extend loans to for their level of risk. If you have no job, or no income- that’s not a good sign. Payday loan providers, almost without exception, expect their money to be paid back quickly. Usually they expect it back within two to four weeks. If you haven’t got a job- even if you’re about to be hired- you’re not going to start earning soon enough to pay the loan back on time. Even when money is sure to start coming in, this is still one of the first and biggest reasons payday loans are rejected. It is a sign you need help paying your bills.
It’s a tough situation. It feels like a catch 22. You don’t have money because you don’t have a job. You can’t get a loan because you don’t have an income. The fact is, you’re probably going to have to look elsewhere. Charitable organizations might help you out. You could turn to family, friends, a church, or your local social services department. At the end of the day, taking a loan when you have no income is a bad idea. It’s like digging yourself into a hole and throwing the shovel out.
Your best bet is to go into full-on austerity mode. Sell some things, cut subscriptions, couch surf- and find gainful employment asap. Frankly- if you’re unemployed loans of any kind are probably the last thing you need.
3. You have a Bankruptcy
If you have a bankruptcy on your record, are receiving government benefits, are primarily a freelance worker or for whatever other reason don’t have a regular consistent income- you will probably be turned down. Even if you make a decent living most of the time, a payday lender will be uneasy. After all, you probably wouldn’t be applying for a payday loan if you were not experiencing a financial dry spell. So it stands to reason that this is one of the most common reasons payday loans are rejected.
Even if you expect to get paid for wages withheld for whatever reason, (maybe you’re a government employee and your dept. has been shut down temporarily), you might not get paid quickly enough to pay off the loan on time. Remember, payday loans are one of the most short-term financial products available. Almost without exception, they must be repaid within two weeks to a month.
Listen, we understand that some employers count on the fact that the little guy has little chance of getting anywhere when he complains about how he’s treated. Even if you are owed money and have been mistreated, fighting back takes time and resources. Unfortunately, payday lenders are more interested in avoiding risk than they are in helping downtrodden workers. There are some cases where you can get a loan after a bankruptcy, but we like to caution to take it slowly.
If You Have an Income Stability Problem…
Having an income stability problem, your best move is to find a more regular and predictable source of income. If your current employer has trouble keeping the payroll account at payout capacity, or if their payroll dept. has a habit of dropping the ball- you should get another job. Employers who are not able to pay their employees on time don’t deserve you. If you’re worried about damaging your employability- just remember- worthwhile employers would not look poorly on your decision to leave a job that regularly failed to pay on time. To the contrary- they would respect it.
4. Too Many Recent Over Drafts or You have Made Payments to Gambling Organizations
Yet another no brainer. Too many recent overdrafts are a serious red flag for any lender. Likewise, if you’re the sort of person who regularly gives money to gambling organizations on the premise that they MIGHT give you more in return- then you look like a hot mess in the eyes of any lender- payday lender or otherwise.
Spending your time and money with gambling outfits is pretty much a commitment. Financial service providers are in the business of minimizing the gambling aspect of the money lending trade. Lenders know all too well that every loan they make is a risk, a gamble. This is one of the most unexpected- yet surprisingly common reasons payday loans are rejected. Lenders are not going to get terribly excited about lending to a proven gambler.
There’s just no way to put this more clearly. If you’re a gambler- forget about getting loans, unless your a wealthy poker celebrity. Worse still, if you have a lot of cash loans bad credit is probably haunting you.
5. Over-applying for Loans
No matter what type of financial service you are seeking- payday loan or otherwise- if you have a history of overdrafts and making late payments, your chances of approval are small. Getting denied fast payday loans is a sure-fire way to dig that hole even deeper, and one of the biggest reasons payday loans are rejected.
Responsible payday lenders cannot extend their services to anyone who they deem unlikely to default on their payments. The reasons for this are a little deeper than most people tend to assume. First of all, they have a responsibility to their employees, their families, and themselves to make sure their business is viable, sustainable, and profitable. Second, if they have shareholders, they are simply not allowed to make business decisions that hinder or damage the profitable status of their business.
In other words, if you have a poor payment history and apply for yet another loan- you are essentially asking the lender to damage the value of their enterprise. Looking at it that way, there’s no need to take rejection personally. Having small cash loans rejected is not the end of the world. Getting accepted when you can’t afford a loan is much worse!
If you’re looking for a loan, and you’re not in a situation that you over-applied right now, make sure it stays like that. Only apply where you have a chance of getting a loan. And how do you know if there is a chance? Use Cashry. We get you offers from lenders instantly.
Julia Peoples is a long-time business manager focused on providing decision making assistance to the public. She works with people at key points of their lives who are making important retirement and financial decisions. She has had many articles published that educate the public on sound financial decision making.
Julia writes for those who are working towards financial freedom or a better understanding of how finances work. She has shared her financial insights with individuals on a one on one basis for years.