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Making ends meet is tough even during the best of times. In fact, more than 78 percent of the workforce lives paycheck to paycheck.
What can you do if you have unexpected expenses that pop up before payday when you have no savings to fall back on? You can’t just go out and get another job to pick up the slack. You need to borrow the money from a qualified lender through a payday loan.
So, what do you need to get a payday loan in the first place? The answer largely depends on the lender, but before you can start looking into the qualifications and requirements, you need to understand how these loans work.
How Payday Loans Work
Payday loans are short-term personal loans based on your average paycheck amounts. They’re issued by a private lender rather than large banks and are typically easier to qualify for than traditional personal loans.
Once the lender gives you the money, you’re free to use it however you see fit. This means you can pay your bills, cover rent, or use it to treat yourself after a really tough week.
However, you will need to make regular payments on that loan until you pay it off in full plus any interest that the loan accrues. The lender will outline the terms of your repayment before you accept the loan, so you’ll always know what you’re getting into.
Keep in mind that payday loans, unlike traditional loans, often have higher interest rates. This means you’ll end up paying more than you borrow and potentially more than the value of your paycheck if you partner with the wrong lender.
What Do You Need to Get a Payday Loan Quickly?
Applying for a loan is as simple as going online or driving to local payday loan locations and filling out an application. The loan company likely won’t run a credit check before they make a decision. Instead, they’ll look at your income and your bank statements to determine how much they’re willing to lend you.
As part of the application process, you’ll need to fulfill some specific payday loan requirements. Though the requirements can vary from lender to lender, these are the most commonly requested:
Proof of Regular Income
Payday loans are an advance of your paycheck and that means you’ll need proof of income for the lender to decide how much they’re willing to give you. Bring the last few pay stubs with you to your local loan provider.
If you’re applying for online payday loans, you should be able to enter the values of your last few paychecks on the application. The lender will verify these amounts with your bank.
Depending on the lender, you may also need to meet minimum monthly income amounts to qualify for a loan. If you don’t make enough, lenders worry that you won’t be able to repay your loan in full and may deny your application altogether.
A Valid Government-Issued ID
If you’re applying in person, you’ll need to have a valid government-issued ID card ready to prove that you are who you say you are. This could be a state or province-issued ID card, passport, or driver’s license.
The ID must be current. If it’s expired, the loan provider won’t be able to process your application.
An Open Bank Account
You’re going to need a place for the payday loan provider to deposit your money after they approve your application and that means you need a bank account. It’s normal for lenders to ask that your account be open for at least a few months.
If the account is new, you may find it harder to get a loan. That doesn’t mean it’s impossible—it just means you’ll need to shop around for a lender that will work with you.
Access to Online Banking
Whether you’re applying in person or looking for online payday loans, you’ll want to have access to online banking. This is how you’ll make payments and stay on top of your loan’s balance.
A Valid Contact Method
Your lender is there to answer your questions and actively support you in your repayment plan. However, they’ll need a way to get in touch with you regarding your application and throughout the life of your loan.
Most lenders request a valid phone number and email address when you apply. They’ll use these to stay in touch with you and update you on your progress.
Only Borrow If You Need To
The requirements for payday loans are relatively straight-forward. If you meet those requirements, you’ll be able to borrow at least some amount of money to help tide you over until payday.
Keep in mind that loans aren’t something you should enter into lightly. You’re taking on debt and that debt will need to get repaid in the future.
Failing to repay your payday loan can get you in trouble and could cause derogatory marks on your credit report. Over time, this can hurt your ability to borrow from other lenders and could even keep you from being able to rent an apartment.
If You Choose to Borrow
If you end up taking out a payday loan, make sure you establish a repayment plan immediately. Start setting aside money from your paychecks and make sure you only use that money to repay your loan. The last thing you want to do is end up taking out another loan to repay your first one.
Now You’re Ready to Apply
Now that you understand the answer to the question, “what do you need to get a payday loan?” you’re ready to apply for one. Just remember to take a step back and make sure they’re the right choice for your needs.
If you decide you’re ready to apply, don’t be afraid to shop around. Talk to different lenders and choose the one that offers you the best rates. This will save you money over the life of the loan.
Looking for more tips and tricks to help you improve your finances? Check out our latest posts.