Payday loans are low-dollar-value, short-term loans between $1 and $1,500. These loans are not offered by traditional banks and financial service providers. Rather, small financial service businesses that cash checks and make title loans offer payday loans. The purpose of these loans is to finance living expenses when borrowers are short on cash in the here and now. Here are a few ways to improve your odds of getting a payday loan when cash is tight.
1. The Higher The Credit Score, The Better Chances You Have
Canadian credit scores run from a low of 300 up to 900 points. Although short-term payday lenders are considerably lenient in judging potential borrowers based on their credit scores, they still routinely deny applicants who have poor borrowing histories and credit scores.
Make sure your credit card, mortgage, and other debt balances are under half of their maximum limit. Regularly use your credit cards to pay for regular expenses and pay them off before interest accumulates. Lastly, check your credit report for any errors and correct them if they exist.
2. Shop Around
Every business has different operating procedures. This holds true for payday lenders and other nontraditional financial services companies. If one or more lenders turn you down for short-term loans, shop around at other small-scale, nontraditional financial services businesses.
3. Don’t Apply For Too Much Money
Taking out more loans than you can afford to pay back is obviously a bad idea, as it often leads to financial difficulties. However, simply applying for too much money can get you turned down for short-term payday-style financing. In other words, only apply for the amount of money you absolutely cannot live without until your next paycheck.
4. Has Your Total Debt Risen Over Time?
An inherent part of any loan approval process involves a review of your financial history. Lenders look out for red flags like steadily increasing debt amounts. If your total amount of debt outstanding has risen consistently for over a year, lenders are likely to turn you down. Payday lenders might take a chance on you, but only at higher-than-usual interest rates.
5. To Prove Your Income, You Need A Paper Trail
If you get paid under the table and don’t have a bank account, lenders won’t be able to verify your income. Make sure you receive physical paycheck stubs when you get paid. Further, consistently deposit that money in a checking or savings account. Lenders will want to examine pay stubs and bank statements before extending payday loan offers.
Payday loans have their disadvantages, but they can definitely come in handy in trying times. Using these tips, you’ll find that lenders will offer lower interest rates, longer payback periods, and higher loan amounts. Additional insights, along with more useful information, can be found at the Speedy Cash website.