Do you need to pay your bills tomorrow but won’t receive your salary until the week after? Late payments could lead to detrimental credit scores and reduce your likelihood of getting a house loan or an auto loan.
This is where payday loans, sometimes referred to as a check advance, can help. But what do you need for a payday loan? What are the usual payday loan requirements and how does the process work?
Worry not, we’re here to clear things out for you. Read on to learn everything you need to apply for a payday loan:
What Do You Need for a Payday Loan?
The problem with traditional loans is that there are too many requirements. Many lenders require a high FICO score. Yes, FICO scores matter, even in Canada and a few other nations outside the US.
This means you can’t get a loan unless you already have a decent credit score and history.
Payday loans work around this. Lenders don’t dig into your credit score and most won’t demand collateral. These are short-term loans, after all, and the goal is to simply determine if you can pay the loan back in a week or two.
Let’s tackle the requirements more in-depth, starting with the minimum age for applying:
To start, you need to be at least eighteen years old. This ensures you can legally open a checking/savings account at the bank and you’re legally employed. This is important because you need these two to qualify for a payday loan.
Lenders also require you to be of legal age to guarantee creditworthiness. They can’t discriminate you based on your age but they can decline if you don’t have at least three months owning an active bank account, three months of work, and previous loan history.
Proof of Identity
You will need to provide proof of identity. Most payday lenders are happy with a driver’s license or employee ID. You can check for a list of legal IDs in Canada.
This ID not only proves your name and age but it also provides an address. An address further proves you’re a real person and that the information you provide is true and accurate. Payday lenders also need your ID to verify data like the information for your bank account.
Proof of Income
Remember: payday loans aren’t for long-term needs. These are quick solutions and you have to pay them back by your next salary. To that end, lenders need proof that you can, indeed, pay them back on time.
Most require you to have a job for at least three months. This proves you receive a regular income and that you’ll likely receive pay in the foreseeable future, guaranteeing your capability to pay back the loan. It also proves you’re not yet dipping into bankruptcy.
Lenders also require a minimum income per month. By providing proof of income, like a payslip, you can showcase your earnings and that you qualify for their minimum loans.
Active Bank Account
You need an active bank account that’s at least three months old. Lenders want to see if you’ve been receiving income from your current employer for a few months, verifying your employment and income stability. This is all part of their process of checking if you can pay the short loan back.
They also need the bank details so that they can deposit the money there as soon as you’re approved for the loan.
Be a Canadian Citizen
Yes, you should be a Canadian citizen to apply for a payday loan. This simply builds on credibility, employment verification, and the ability to get a bank account in the country. Citizenship also helps with clearing any tax regulations.
This does mean legal residents may not qualify. However, there are alternative loans that they can apply for. Some of these work similarly to payday loans but may require some form of collateral, such as an expensive gadget or car title.
Again, your proof of identification verifies this data. Lenders can check if you’re indeed a Canadian citizen by going through your ID details.
Not in Bankruptcy
You won’t qualify for a payday loan if you are in bankruptcy or nearing bankruptcy. Lenders want proof you can pay the loan back and bankruptcy is the exact opposite of this capability.
This is why you shouldn’t rely on payday loans if you’re deep into debt.
Consider payday loans as an emergency solution. Say for example you got into a medical accident and need to pay the hospital fee today but you won’t get paid until the next week. Payday loans are also a great way to pay off credit card bills on time.
Short Term Debt Ratio
Lenders won’t require a good credit score or impressive credit history. That said, they still want some proof that you can handle loans like this. If you’ve had other loans before, you should let them know about them.
Showing off previous loans, particularly other payday loans, prove you know how it works and that you pay loans back on time. This increases your likelihood of approval.
What Doesn’t Count
You need to present some form of income. However, there are a few instances where your income won’t get approved. Student loans, disability income, insurance/pension income, social assistance, and self-employment often won’t qualify.
Some people might be able to work around the restriction on self-employment, particularly people who earn on YouTube. You should contact your payday lender to ask for specifics regarding your income qualifications.
Get a Payday Loan Today!
Don’t wait for weeks for a loan when you need the money now! If you run into a financial emergency, get a payday loan!
What do you need for a payday loan? It all boils down to proof of identification, proof of income, and your legal capability to work, open a bank account, and pay the loan.
If you want to learn more or if you’re interested in getting a payday loan, get in touch with us now. Let us help you!