1. The potential borrower is not holding a job. The payday loan is a loan against the wage that an employed person receives. Without employment there is no payday and no capacity to pay the loan.
2. The potential borrower has filed for bankruptcy during the year. While lenders do not check a person’s credit history, they are concerned about the person’s capacity to meet his financial obligations. A bankruptcy is a declaration that the person can no longer support himself financially. And one year is not sufficient time to recover from such financial mess.
3. The potential borrower has been employed for less than the required number of months. Most payday lenders require a client to be holding his current job for at least six months. If a person has been employed only for five months and he needs a payday loan, he must search for a lender who will likely accept his present employment situation. There are a few lenders who require a client to be employed only for at least three months.
4. The checking account of the potential lender is relatively new. Payday lenders prefer clients who are fairly stable and a good indication of this financial stability is a checking account which is at least three months old.
5. The monthly net income of the potential borrower is less than the required income. The required income is usually $1,000. If a person receives less than this, the lenders will assume that he will not be able to pay any amount that he will loan.
6. The potential borrower has a considerable number of overdraft fees and/or NSF in his checking account. Such will alarm the lenders because the NSF and overdraft fees indicate that the person is not a dependable borrower.
7. The potential borrower has unpaid payday loans or returned checks. Similar to the previous situation, these outstanding loans will urge lenders to deny the application.
8. The identity of the potential borrower cannot be confirmed. This often happens when the borrower uses a false name or provides inaccurate information. This also happens when the contact information provided by the person cannot be used. Obviously, the lenders will not release funds to an unknown entity.
9. The payday lender cannot easily or directly establish the bank account information provided by the potential borrower. The lender tends to assume that the bank account no longer exists or is not valid.
10. And lastly, the potential borrower receives his wage once a month. Payday loans are short-term loans and the loan period is usually within 18 days. Employees who are paid monthly do not satisfy this requirement.
If a person’s loan request is denied but not due to any of the ten reasons above, he should contact the payday lender and ask for details.
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