Finding out if you're eligible is the first step to getting your money.
Payday lenders are meant to have flexible lending criteria, right? Surely you will be approved. This is true, but it's also important to know that approval flexibility differs between lenders.
You need to make sure you meet the minimum eligibility criteria before you submit your application. So, what are the criteria you need to look out for when you're hunting for a payday loan? Can you apply for a loan if you have a default on your file, or if you're bankrupt?
Read through our guide below to give yourself the best chance of being approved.
What is the minimum eligibility criteria for payday loans?
Every lender has different eligibility parameters, but generally you need to meet the following minimum criteria to be approved:
- Be over the age of 18
- Be an Australian citizen or permanent resident
- Receive a regular income, either through Centrelink benefits or employment
Can I be approved for a payday loan if...
I am unemployed?
Some lenders may approve you for a loan if you are unemployed provided you can demonstrate that you receive a stable income from elsewhere, such as investments or Centrelink benefits.
Review the lender's minimum eligibility criteria and if you are unsure contact them directly about your situation. If you have an irregular income you may have a better chance of approval with an in-store application.
I receive Centrelink benefits?
Most lenders will consider you for a loan if you receive Centrelink benefits, but your options will be more limited if this is your sole income source. Some lenders offer loans if Centrelink is your only income, but most lenders have a rule that your repayments can't take more than 20% of your Centrelink income or that you must earn 50% or more of your income from employment.
I have bad credit?
The large majority of lenders will approve you for a loan if you have bad credit. However, you still need to demonstrate a willingness and capacity to manage the loan that you're applying for. If you are concerned about your credit history, you may want to consider a no credit check loan.
I am bankrupt?
If you are currently bankrupt your loan options will be very limited, but there are still lenders that will consider you. If you were previously bankrupt, check the lender's eligibility rules before you apply and if you're unsure, contact the lender directly.
I already have a payday loan?
Payday loans are expensive forms of credit and taking out multiple loans can lead to debt problems. If you are trying to apply for multiple payday loans, lenders have to take reasonable steps to prove you will be able to repay the loan without substantial hardship. If you are in this situation you may want to reconsider applying.
Tips on getting approved for a payday loan
- Check the last three months of your bank statements. The lender will be checking these so you might want to take a look too. The lender will be looking for red flags such as overdrawing your account, or if the pay you receive into your account is inconsistent with what you state on your application. Other exchanges such as gambling transactions can also be an issue.
- Don't apply for more than you can afford. Just because the lender allows you to apply for a certain amount doesn't mean you should. For example, if you apply simply to see how much you could get, the lender could end up rejecting your application altogether rather than just approving you for a smaller amount.
- Provide as much information as possible. Many applications become delayed when the lender has to chase information. It can also lead to automatic systems not approving you for a loan instantly, simply because you didn't provide everything that was required. Check everything that the lender needs from you and make sure you send it.
- Double-check the eligibility criteria. Lenders set minimum eligibility criteria which you need to meet before you apply. If you don't meet one or more of the criteria, do not apply. It will lead to a rejected application on your credit file and this will make it more difficult to get approved for a different loan.
How to compare payday loans before you apply
Before you submit an application for a payday loan it's important to compare your options to find one that best meets your needs. Here are the features to consider:
- How much the loan costs. Payday lenders that offer loans under $2,000 cannot charge more than 20% as an establishment fee and more than 4% as a monthly fee. However, you can find lenders charging less than this so make sure to look at these charges.
- Repayment terms. Loan terms for payday loans are generally around 62 days to one year. The length of the payday loan will directly affect how much you will pay because you will be charged a monthly fee (maximum 4% per month). Look at the payday loan terms on offer and use a payday loan calculator to determine how much the loan will cost. finder offers a payday loan calculator that uses the standard 20% + 4% fee structure, but you can usually find a calculator on the lender's site as well.
- Additional fees and charges. Aside from upfront and ongoing fees, the lender is also able to charge enforcement and default charges. Make sure you check how much the lender will charge you if your repayment is late, are sent a default notice or reschedule one of your payments. If these charges are excessive you may want to consider a different lender.
- The application process and turnaround time. Find out how you can apply, how quickly approval takes and when you can expect to receive your funds. If you need your funds by a certain time this may be a deciding factor.
How do you apply for a payday loan?
The application process for a payday loan is usually completed online. After you confirm you meet the minimum eligibility criteria for the payday loan and that you will be able to afford the estimated repayments, get the following documents ready to complete your application:
- Two forms of ID (driver's licence, passport or birth certificate)
- Employment or Centrelink payment details
- Information regarding your finances eg income, assets and liabilities
- Specifics about your credit history including defaults and bankruptcies
- The latest three months of your bank statements
After you submit your application, you will either receive a response instantly or within a few hours. If you're approved you will usually receive your funds within one business day.