What if you lost your home thanks to slow paperwork?
When people need emergency money, many turn to solutions such as traditional loans. But these loans may have slow approval times and slower paperwork that delay you getting your much-needed money.
The best solution for you may be a payday loan. Keep reading to learn more about these loans and how to get approved!
What Is a Payday Loan?
Below, we've got our top tips for getting your payday loan approved. Before we go further, though, it's important to define exactly what these loans are
Traditional loans are based primarily on credit and last for a long time. For example, five-year private loans from a bank are not uncommon.
Payday loans are based primarily on the applicant having a job. And they are intended as short-term loans that should be paid back within a month or the interest will increase.
Some of the benefits of payday loans include the easy application and swift payout. To fully speed things up, use our guide below to ensure your loan request is approved!
As we said, the primary consideration for a payday loan is having a steady source of income. That means when you are applying, you must be honest and accurate about all of your info.
If you are dishonest about your monthly income, for example, your application may be rejected. The same thing may happen if you report working for a company that you no longer work for.
Don't exaggerate your monthly income, either. As long as you are making at least four figures and have been at the job two or three months, you should be fine.
The Amount Matters
One of the factors the lender will consider is the loan amount versus your monthly income. In short, they want to make sure you'll be able to pay the loan back in a short period of time
Because of that, you shouldn't ask for more money than you need. Try to figure out the exact amount you'll require before you apply.
Another reason why you shouldn't request too much is that it may mean you are "stuck" with a high-interest loan for longer than you would like. If you know exactly how much you need and exactly how quickly you will pay it back, you can avoid this potential problem.
Know Your Credit
Different payday lenders have different rules and requirements. Some of them do not look at credit at all and some consider credit as well as your current income.
To maximize the chances of your payday loan approval, you should know your credit before you apply. The easiest way to do this is to sign up with a free credit monitoring agency.
Such agencies will typically send you a monthly report about your current credit score and what has changed it. And you can use access to your credit report to discover and dispute any inaccuracies on your accounts.
Basically, there's no "downside" to knowing your credit. This knowledge can help when negotiating with a lender and can help you improve your credit score over the long term.
Debt Vs Income
Again, different lenders have different internal regulations. And some of them are going to care about your debt-to-income ratio.
This ratio is exactly what it sounds like: a calculation of how much money you owe versus how much money you are bringing in.
To simplify things, you can simply compare your monthly income with the amount of money you want to borrow. To get the best chances of approval, you shouldn't try to borrow more than about a third of your monthly income.
And, of course, the less money you ask for, the higher the chance you will be approved!
When you hear "payday lender," you may be thinking about some specific lender down the road. Keep in mind, though, that it always benefits to do some "comparison shopping."
There are likely multiple lenders in your area. And on top of that, there are plenty of online lenders to help you apply for online payday loans
This gives you a chance to review the different policies of each lender. And, of course, you can figure out who has the most competitive interest rate.
We know you're probably not swimming in free time. But taking a few minutes to review lenders can really boost your chances of getting approved.
To Renew or Not to Renew
One of the biggest lender policies you need to check on is the renewal policy. This dictates what happens with the loan if you have not paid it back within a month.
Some lenders, for example, will not renew the loan. And if you don't pay it back swiftly enough, the loan may end up in collections.
Other lenders may automatically renew the loan under the same interest rate. While this can be preferable to going into collections, you don't want to let the interest on a large amount keep compounding!
Local Vs Online
Earlier, we mentioned that you should check out online lenders as well as local ones. And you should know that each kind of lender has different advantages and disadvantages.
For example, local lenders may be likelier to approve you based on factors such as who you work for. This can give you an edge if you were in danger of not getting approved.
However, online lenders are typically able to offer more competitive interest rates. And you can apply immediately without leaving the house, and that's a big plus if you need the money quickly.
We recommend doing your homework on both local and online lenders to find the one that best suits your needs.
The Bottom Line
Now you know how to get that payday loan approved. But do you know where to spend your newfound money?
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