Introduction
In today’s world, payday loans are definitely one of the most convenient ways of getting cash in advance. They are usually coming with a high-interest rate and a short term of returning the funds. Simply put, these types of loans are most common among middle-class workers. Therefore, many people use them in order to get something they can’t afford at the time.
On top of that, it’s quite suiting to know that you can always ask for a loan if you fulfill all requirements. However, not all of us have what it takes in order to get a loan. So, what’s actually needed? How to qualify for a payday loan then?
Well, meeting all requirements surely is of the essence, but, it’s also important to know where to go and what to do.
In that light, let us guide you through the process and see what’s actually needed in order to qualify for the payday loans. Let’s begin.
Payday Loans Requirements
First of all, you must know if you’re suitable to ask for a loan. As this is the first thing you need to check, it’s always good to know this in advance. So, what’s needed for a payday loan?
You can qualify for payday loans only if you have:
- An operating bank account – When it comes to your bank account, you should have everything settled up. Also, it’s important to allow your lender to have insight into your bank account as well as your income rate, etc.
This is actually one of the main requirements you need to fulfill because no one would give you any money if they aren’t certain you can repay it back. - A steady, yet secure, source of income – Your income will definitely affect the payday amount, interest rate, and many other things. If, for example, you have a steady and solid income, the lender will mark you as a ‘’good’’ option for business.
Of course, it doesn’t always have to mean that you will be approved for a payday loan only because your income is high – you have to meet other requirements as well! - ID documentation – ID documentation is one of the crucial things you have to bring with you once you decide to take a loan. Simply speaking, through the ID information, a lender will be able to find you in a government database.
Meaning, they will be able to know if you have any history when it comes to payday loans. Also, ID is important as you need to verify your connection with the bank account. - At least 18 years of age – Everyone older than 18 is able to qualify for the payday loan. That’s the rule!
Payday Loan – Everything You Need to Know
Besides these requirements, some payday loan dealers require other things as well. For example, they want proof or validation from a company you work in (proof of income). On the other hand, if you have your own business, it’s also possible that the dealer might want to see your income in the past 3 months.
Anyhow, let’s break this down and see every crucial aspect of getting a payday loan.
As we already mentioned requirements you need to meet in order to qualify for a payday loan, it’s time to cover some of the most important stuff regarding payday loans.
- CFPB Legislation Rules
- Interest Rates
- How much money can you expect?
CFPB Legislation Rules
When it comes to rulemaking, Consumer Financial Protection Bureau issued a specially designed rule that helped many people get payday loans. Before this rule, payday lenders were in power to assess the ability of repayment of any borrower. Meaning, it was really hard to pass all requirements and get the loan you want.
So, on July 7. 2020. the CFPB ruled in favor of everyday workers where they removed this ability that lenders had. Anyhow, you should always be careful when it comes to payday loans, as the situation can shift in another direction basically anytime.
How high are Interest Rates?
Depending on the lender, interest rates can significantly vary. Therefore, it’s crucial to get to know the exact rate you’d be given on this deal. Only then will you be able to calculate whether you are a suitable payday loan borrower.
On the plus side, there are annual percentage rates that are issued by the government. This means, there are the highest possible rates available that payday loan lenders can’t top.
What’s the amount you can expect?
As we already mentioned, the amount mainly depends on your income. If you have a solid income, any lender will be pleased to give you a loan. Also, the amount of cash you will receive varies from one state to another.
However, an average loan can go from $50 to $1000.
What’s the Risk of Getting
It’s not always a good idea to get a payday loan as they can push you into a worse financial situation over time. So, many people use this kind of loan only when they have to, or if they are certain to repay on time.
So, what’s the risk here?
Well, imagine if you’re not able to repay on time. Then, for every extension, more and more fees will apply, resulting in a huge fee that you have to pay overall. It’s actually quite absurd to get this kind of loan if you’re not able to repay it on time. The fee may vary from $10 to $20 for every $100 you borrowed.
Conclusion
Payday loans are definitely worth it if you’re able to meet all requirements and pay on time. They are also a good source of getting fast and easy cash so you can invest.
All in all, we surely hope this guide helped you to understand everything about payday loans and how to qualify for one. Now, it’s all up to you to decide whether will you go to your lender and ask for a payday loan.