Payday loans should definitely be used as a last resort, and they are suited for people who need a reasonably small amount of money in a short period of time. Many of those who apply for a payday loan also have bad credit. Fees associated with these fast cash loans are exorbitant, translating into annual interest rates of 200 percent or higher - usually much higher! They are also rather easy to get for most people who are employed full time or near full time. Not all people, however, who apply for a payday loan are approved. The following are some of the more common reasons that people are denied payday loans:



Some people who apply for a payday loan are disapproved because they don't meet the minimum income requirements. Even the most flexible payday lenders cannot loan money to someone who grosses less than about $800 per month. Anyone working at the federal minimum wage full time would easily meet this requirement.

Someone who is self employed will find it more difficult to get a payday loan. Many lenders will not accept self employed income as security for a payday loan. Those lenders who do will require you to provide a certain number of bank statements to verify your income.

An almost universal requirement to get a payday loan is that the applicant have a bank account. A typical payday loan is due to be repaid on either your next payday or the following payday. The money is deducted from your bank account on the agreed upon date. If you have no bank account, the lender will not have a way to accept your payment.

As the term "payday loan" suggests, you must have some kind of income to qualify. Even if you have a healthy savings account, you must have income or you will not be approved. Then again, if you had substantial amount of readily accessible savings, why would you want to get a loan with a 600% interest rate?

A red flag for most payday lenders is an outstanding loan with another lender. A person with multiple payday loans outstanding is viewed as a serious risk of default and returned checks. Most lenders use a data verification service to identify applicants with multiple outstanding cash advances, and to confirm that the banking information provided by the applicant. If you have had returned checks in the recent past, especially to a payday lender, this information will come to light and will prevent you from getting a payday loan.

Bankruptcy, especially in the last year or two, will make it more difficult to get a payday loan. While the information provided to the lender is not a credit report, it will reveal a recent bankruptcy. Until you have put some time between you and the bankruptcy, you will be considered financially unstable and will not be eligible to get a payday loan from many lenders.

To qualify for a payday loan, you must have been employed with your current employer for a certain period of time, usually at least three months. This requirement is not universal, but many lenders will not approve payday loans for new employees. You must demonstrate that your employment situation is somewhat stable, and new employees are often subject to a probationary period where they may be more easily terminated.

If you fall into one or more of the above categories that alarm payday lenders, don't dismay. Not all lenders consider every one of these factors in their approval process. Most full time employees would qualify for a payday loan; however, if you find yourself using payday loans frequently, take an honest look at your situation. If your debt is growing out of control already, too many of these expensive loans can push you to the brink of a financial disaster, and consequently, you should use them rarely and cautiously.