When we ask any financial or bank for a personal payday loan, they will do a study of our economic profile and they will know if we will be able to repay the credit. The most common is that if an entity denies us a loan it is because it understands that lending us money poses a risk of default. Our income is one of the most representative indicators of our solvency against the repayment of the personal payday loan, but, in addition, other factors such as other debts we have are taken into account.
If we are going to apply for a personal payday loan, we can anticipate the financial company’s response by making this simple calculation: between 25% and 35% of your income is what you must allocate to pay loans, mortgage and credit card debt.
30% of your income should not go to debt
The bank considers that if we go up from this percentage we enter into overindebtedness. Banks and lenders take this recommendation into account, so depending on the amount of our monthly income and our debt, they will grant us the credit or not. We speak of between 30% because depending on the situation of each person or family, we can increase or decrease that percentage. In that percentage, all the debts we have are included, so if we already have some type of credit, the mortgage for example, which represents 25% of our income, it will be difficult for us to obtain another loan.
For a family that has an income of about 4,000 dollars a month, perhaps they can afford to spend 35% of their income (1,400 dollars) on loans, mortgages and cards. Well, they would still have 2,600 dollars for the rest of regular expenses such as invoices. However, for a personal payday loan from a single holder that has a salary of about 900 dollars, allocating 315 dollars of this can be a mismatch in its economy, since it would only have 585 dollars for monthly expenses. These examples serve to explain that each situation is different and we have to be responsible when applying for any credit. Well falling into any default on any loan is usually quite expensive in the end for interest and late fees.
The other requirements of a personal payday loan
The solvency that we present with our regular income is one of the main requirements that we will be asked when accepting or not the loan, but there are some more. One of the main reasons for rejection is the inscription of our name in delinquent files. If we appear in some of those files, the banks will not lend us money and we will have to resort to private equity companies.
In addition to those described above, for us to be approved for a credit, it is necessary that we be of legal age and that we reside permanently in the country. We must always bear in mind that each entity or lender has its own concession requirements and they will not always communicate them. We also have to know that in the vast majority of cases they will not tell us why the loan application has not been approved.