Applying for Payday Loans? 7 Essential Tips Every Borrower Should Know
Believe it or not, more than 78 percent of workers live paycheck to paycheck. If you’re one of them, you don’t have funds to make it through those lean times.
But your expenses don’t change just because your employer is late with your paycheck. You still need to pay rent, buy food, and put gas in your car to get to your job in the first place.
Applying for payday loans is a great way to make ends meet. But there’s always the chance your loan application won’t get approved.
Use these easy tips to help increase your chances of approval and streamline the application process.
1. Know Your Options
Payday loans are just one option when you’re short on cash. Before you decide to apply for a loan, consider your other options.
Are there relatives who could loan you the money at little to no interest? Do you have savings that you can use to make ends meet? Or is a loan your only option?
Remember, when you take out a loan, you’re responsible for paying the full amount plus interest to the lender. And you have to do it within the amount of time stipulated in your loan agreement. Failing to do so means you’ll be subject to additional fines or fees.
2. Borrow Only What You Need
If payday loans are your best option, you need to decide how much you want to borrow.
It’s tempting to borrow the maximum amount possible. After all, you have bills to pay. But doing so can get you in trouble in the future.
Instead, borrow only what you need. Look at the bills and expenses you have coming before your next payday. Then, look at any other sources of money you can use to help cover those expenses.
This tells you how much you really need to borrow from your loan provider. Keep it as small as you can. Remember, lenders base your interest payments on the total amount you borrow.
The more you borrow, the more money you’ll owe the lender. And the last thing anyone wants to do is get in over their heads when money is already tight.
3. Research Different Payday Loan Providers
No two lenders are the same. And that means the terms of their loans and the overall customer experience will be different.
Take your time to research each lender you’re interested in. Look at customer reviews to see what others are saying. Check with the Better Business Bureau to make sure they’re a trustworthy company.
This will help you narrow down your list of providers and makes it easier to choose the best payday advance company for your needs. Remember, you can get a quote from multiple lenders to compare their terms, interest rates, and options.
4. Know Your Credit Score
Traditional lenders put a lot of emphasis on your credit score. The higher it is, the more likely you are to get approved for the loan. Payday advance lenders don’t typically use your credit score for approval purposes.
Instead, they use it to help set your interest rate. If you have a high credit score, you’re considered a low-risk applicant. Typically, they’ll offer you a lower interest rate because you’re more likely to pay the loan in full quickly.
If you have a low credit score, you’ll likely still get approved for the loan. But you’ll also pay a higher interest rate.
Before you apply, check your credit score. This will help you create a better repayment schedule once you receive your money.
5. Have Your Paperwork in Order
Since you’re borrowing against your paycheck, you need to prove you’re employed. Bring copies of your recent pay stubs with you if applying in-person. Your lender will also need your checking account information to issue the loan.
If you’re missing any paperwork or information, try to get those documents before starting the application process. The sooner you have everything together, the sooner you can get the money you need.
6. Fill Out the Application Accurately and Honestly
Payday loan providers determine your loan amount by looking at your total income. This means if you work for more than one employer, you may be eligible for a loan based on your combined paystubs. But you will need to submit proof of your income before you can get your money.
Lying on the application and saying you make more than you really do only slows down the application process. Once the lender finds out, your application will get put on hold until you correct the information.
When you need money fast, any delay in the application process is inconvenient and frustrating. Spare yourself that frustration and fill everything out as accurately and honestly as possible.
7. Understand the Terms of the Loan
Every lender offers different loan terms. And before you accept the money, you need to make sure you understand everything that goes along with the loan.
Once you’re approved, look at the interest rate, your payment schedule, and the penalties for missed payments. If you’re okay with them, feel free to accept the loan.
If you’re unclear on anything, don’t hesitate to ask the lender for more information. The last thing you want to do is accept a loan that you don’t fully understand. And if a lender won’t clarify terms or explain things to you in detail, walk away.
Thinking of Applying for Payday Loans?
Applying for payday loans is significantly easier than applying for traditional loans through a bank. And these tips should help you find the best loan for your needs.
But payday loans are not a long-term solution. To get to long-term financial stability, you might need to meet with a financial planner to help you get there. Make sure to read our article on what to expect when you start financial planning.