What Do You Need to Get a PayDay Loan?

Payday loan customers must meet certain eligibility requirements.

Payday loans are cash advances of $300 to $1,000, which are usually due for repayment on the borrower's next payday -- normally in two weeks. According to the payday lender trade association, the loans are for short-term use only. They do become expensive upon multiple renewals if you cannot meet the original repayment agreement. Most working people qualify for payday loans.

Identification

Applicants for payday loans must present proper identity documents. Government-issued photo identification, such as a driver's license, U.S. Permanent Resident Cards, commonly known as green cards, and official passports are all acceptable. Would-be applicants who have questions about identification requirements should inquire by telephone before they visit a payday loan office.

Employment

Payday loan customers must prove that they have full-time employment. Some lenders require a minimum salary amount to qualify for a loan. If the borrower is unemployed, lenders may approve applications from recipients of Social Security checks or those who have regular income from other reliable sources.

Checking Account

Applicants must also have active checking accounts with direct deposit from their employment. The reason for this requirement is that borrowers have to provide a signed check in the amount of the loan, plus the finance fee, when they sign the loan paperwork and receive the loan funds. On the loan's repayment date, which is on the borrower's payday, the lender can present the check for payment at the borrower's bank. An alternative to this procedure is for the borrower to sign an authorization for the lender to debit his checking account for the amount of the loan plus the finance fee.

Loan Disclosures

There is a legal requirement that all payday loan customers carefully read the information on the "Truth In Lending" disclosure forms that payday lenders prepare for each loan transaction. The forms tell the customer the exact cost of the loan. Lenders should not rush the borrowers in any way and should ensure that they have sufficient time to read and understand the information.

Other Requirements

Some states have additional requirements. For example, a person may not borrow from a payday lender if he has another, unpaid payday loan with another lender. In other cases, a certain time period must pass since the repayment of a payday loan before a customer can reapply for another.

References

• Community Financial Services Association: What Is a Payday Advance?