Can You Be Denied a Payday Loan?

Intro:

While payday loans offer a quick fix for short-term financial needs, there are various reasons you might be denied. Understanding these reasons can help improve your chances of approval.

Key Takeaways:

• Payday loans don’t require credit checks but may still be denied for unstable income or poor financial habits.
• Common denial reasons include incomplete forms or lender-specific criteria.
• Reviewing your application and improving financial habits can increase approval chances.

Why was I denied a payday loan? You may think that applying for a payday loan is a quick and easy solution for short-term cash worries, and you’re probably right. However, you could get denied a payday loan for several reasons. You may have filled out the loan form incorrectly or perhaps, you left a few required fields incomplete. If you keep getting denied for payday loans, here’s what you should know (including alternatives).

What Are the Common Reasons for Payday Loan Denial?

Did you know that the payday loans don’t require a credit check? So, a poor credit history and score would be the least of your concerns when applying for such a loan. However, there are other factors that lenders look at, which might be why you are denied payday loan:

Unstable or Insufficient Income

An unstable or insufficient income is perhaps the reason why you are denied online payday loan. This is because payday lenders look at your ability to repay the loan. Hence, a stable income is important for getting a secure approval.

On the other hand, an unstable or insufficient indicates that you may not be able to repay the loan - at least, not on time. That is also the reason why lenders require proof of regular paychecks or if there are other sources of steady income.

Poor Financial Habits (or Excessive Debt)

Even though payday lenders don’t usually rely on full credit checks, your financial habits will be a point of interest. They will review your bank statements and other relevant financial records to have a good understanding of your financial habits.

In their defense, it is important for lenders to know whether the person they’re lending to is capable of managing personal finances. If you are denied payday loan, it could be due to more than a few instances of bounced checks, overdrafts, or even excessive debts that keep on compounding.

Incomplete or Incorrect Applications

Many times, applicants fail to fill out the loan applications properly. It is one of the most common reasons behind payday loan denial too. If you get denied online payday loan, maybe you left out an important field on the application form.

Sometimes, even simple errors or omissions in the forms can lead to payday loan denial. It could be missing personal details or incorrect bank information. Or it could be something more subtle, like typos or missed figures in the income field which lead to payday loan refused.

Lender-Specific Criteria

Then, we have the individual rules and criteria that every lender has. You could keep getting denied for payday loans because of the lender’s business’s policies and regulation. Let us explain. Some lenders might practice restrictions when it comes to residence.

They might not offer payday loans to people living in or outside a certain province in Canada. Or, it could be the type of employment or the amount that you’re requesting against your income level or debt burden.

All these reasons along with the specific guidelines of the lenders could be why you are denied an online payday loan. So, make sure you review the general payday loan guidelines, especially when it comes to lender-specific criteria to secure an approval. For instance, you can check out the Financial Consumer Agency of Canada (FCAC) which provides extensive resources to consumers for better personal finance habits.

A Quick Recap

How to Avoid Being Denied a Payday Loan

If you were denied a payday loan today, you can observe a ‘cooldown’ period and try again later. However, you should try a few best practices (including good financial habits) to improve your chances of approval significantly. Here’s how you can do that:

Review Your Loan Application

Before you press “submit”, take some time to double-check all the information. You might notice some mistakes, a few typos here and there. The information should be up-to-date and correct, including accurate income details.

Get Good With Finances (Better Financial Habits)

If you improve your financial behaviour, starting today, chances are that you might not experience a denied payday loan in the future. You can do that by reviewing your bank statement to get a good idea of how you spend. Weigh the income against your expenses and start planning.

Take care of frequent overdrafts, unnecessary fees/subscriptions, and so on to get a good hold of your personal finances. You can review and seek financial counselling from non-profit organizations like the Credit Counselling Society in Canada for a chance at securing the required loans.

Take Care of Existing Debts

So, what if you’re juggling a few short-term loans at once? You can start by reducing your debt load through regular and timely payments. That way, once the debt-to-income ratio is convincing enough and shows you can handle repayment, lenders might consider approving your application.

Some Alternative Loan Options if You’re Denied a Payday Loan

What are some alternatives if I’m frequently denied payday loan services? There are a few alternatives you can approach for your borrowing needs. However, it is always advisable to plan ahead and seek financial counseling if possible.

Credit Unions

They are a type of lending institutions that offer small personal loans but with more flexible terms (sometimes).

Personal Lines of Credit

This works when you have a steady income. You can apply for a line of credit and get access to a revolving source of funds.

Secured Credit Cards

In case your credit history is a problem, you can start building credit with a secured credit card. It’s also a much safer long-term option.

Conclusion

So, if you keep getting denied for payday loans, don’t worry - it’s not the end of the road. When you understand the actual reasons behind it, you can address them on time to improve your chances of approval in the future.

This will typically include aiming for a steady and sufficient income stream. Moreover, you will have to be aware of the lender-specific criteria, for which you will have to conduct thorough research. More importantly, good financial habits are what will make it easier for you to acquire payday loans.

Contact the professionals at Magical Credit to get a consultation and inquire about payday loan facilities today!