Since the world financial crisis, credit in
general has been much more difficult to get a hold of. This is because the
crisis was, in part, caused by an excess of lending combined with a marked lack
of repayment. During the nineties, banks began to provide unlimited credit to
almost anyone, unaware that the situation was unsustainable. Eventually it
became clear that it doesn’t make good financial sense to lend to anyone who
can’t actually repay the sum in their lifetime.
In
this climate, applications for all types of credit have become much more
thorough. Even if you’re looking for a loan as small as a payday loan, you will
still have to pass certain criteria. Before the financial crisis, it was common
for payday loan providers to give out credit based on evidence of a pay check
alone. This is no longer the case, especially in Australia. Legislation has been
passed making lenders responsible for their borrower’s debt. If the customer
cannot repay the sum within a reasonable time period, it is illegal to lend it
to them.
For
this reason, anyone in search of a payday loan will now have to prove more than
their income. The application process is still far simpler than an application
for a traditional personal loan or credit card, and it can be carried out
within just one working day, but there is no guarantee that just anyone with a
wage will qualify.
So
how do you know if you will qualify for a payday loan? Well, first of all you
should look at your monthly incomings and outgoings. Include everything in this
figure; your rent, your bills, your credit card repayments, your food, and
anything else you need to spend money on. Whatever you have left over after all
of this is the amount that you would feasibly be allowed to borrow as a payday
loan. This is known as you ‘disposable income.’ If you have nothing left over
after your monthly expenditures, it is unlikely that you will be able to repay
a payday loan in full on your next pay date, and this means your application
may be rejected.
Remember
that loan providers will also look at any projected sums of money you may have
to pay. For example, even if you theoretically have enough money to pay back
your payday loan on your next pay date, if Christmas is coming up your loan
advisor will take these extra expenses into account, and may decide that it is
unlikely you will be able to pay it back on time.
Read more about: How do I get a paydayloan?
