Can You Get A Payday Loan If Your Bank Is Overdrawn?

Posted on: 28 September 2016

The only thing worse than being in overdraft is being in overdraft when your car breaks down or your air conditioning stops working. You need money to get these things fixed and you already owe money to your bank. Normally, a person who has a car or air conditioner that breaks down would turn to a payday loan to foot the bill until his/her next payday. The question is ā€“ does someone with a negative bank balance also have this option?

What Do Lenders Need to Know?

Before approving you for a payday loan, lenders will need to know that you have the means to pay it back. This is less about the intention, but more about the ability. You can show this through being in steady employment and having a pay stubs to prove a regular income. You may also be able to prove benefits as a regular income for the time being.

Lenders will also want to know that you have a checking account and that you have a permanent residence. This will be why they want to see bank statements and utility bills.

Does That Mean No Payday Loan?

The upside to showing your bank statement to your potential lender is they really do not care about your balance. They just care that you have a valid and current checking account. Some payday loan companies offer instant bank payments and will want pre-authorized payments to take the money back out.

However, not all payday loan lenders are the same. Some lenders will be worried if they see the negative balance, and wonder how you will pay back the money and fees if you cannot pay your bank back. The best thing you can do in this situation is be upfront with the lenders and see if they have a problem with this issue as some of them will and some of them won't.

Do You Already Have a Reputation?

Having a trusted reputation with a current payday lender may help you in this case. The lenders won't be as interested in your current bank statement, because you've shown you have a checking account already. They may be interested to see that you are still in the same job and still receive a steady paycheck, but that's it. You stand the chance of a quick approval.

If you have a negative reputation with the lender (or another lender) because you haven't paid a previous loan, the chances of you getting another loan are unlikely. This is because the lender is going to assume you are not going to pay back the next loan either.

There isn't a simple answer when it comes to an overdrawn balance. There are chances that you will be approved, but it will depends on the payday loan company. Contact a company like Community Resource Bank for more information.