Payday loans are a solution for short-term cash flow issues. Payday loans are used to pay car repairs, utility bills, rent and other expenses.

In some cases, a person gets a payday loan to avoid costly bank fees such as overdraft charges and returned check fees, but sometimes the fees occur before the person has a chance to get the loan. This can present a problem in getting a payday loan.

Loan Process

To qualify for a payday loan, certain documents are required.

A payday lender will request at least one bank statement, proof of income such as a pay slip or direct deposit receipt, an ID or driver's license, proof of a telephone and at least three references. Once you present these materials, the lender will agree to the payday loan in exchange for a postdated check.

Bank Accounts With Negative Balances

If your bank account has a negative balance, this could disqualify you from receiving a loan. However, if the bank statement shows a positive or zero balance, even if the account is currently overdrawn, the payday lender could still approve the loan, since lenders do not normally check the balance of the account.

Current Standing With Payday Lender

If you have an outstanding loan with the payday lender, and that loan was paid for with a check returned for insufficient funds, the lender will not approve an additional payday loan. The first loan must be paid before the lender will consider granting additional loans.

Account Audits

If you have a long-standing relationship with a payday loan lender, the lender might ask for an updated bank statement. If the most current statement shows a negative balance, the lender could terminate the relationship, meaning you could no longer borrow money from the payday loan lender.


Borrowing from payday lenders should be a short-term solution for a temporary solution. Don't borrow more than you can afford to pay back, advises Consumer Union. It is very easy to fall into the cycle of getting a payday loan, and then, after paying back the loan, taking out an additional loan. Although payday loans can help, they should never be a long-term solution to a financial problem.