Do You Qualify for Payday Loans – All You Need To Know?

The answer to your question, “Do you qualify for Payday Loans?” begins with determining whether “Yes” or “No”, a payday loan is right for you. We will list a determining factor that will help you determine if the Payday Loan Program is right for you.

We provide this list from our research and is not inclusive of all requirements of the Payday Loan service and does not imply approval or disqualification.

What are payday loans?

A payday loan is a type of short-term loan or borrowing where a Payday loan lender will give a borrower a high-interest fund based on their income. It’s typically based on a portion of your next paycheck.

What you need to about Payday Loans

Payday loans are simple and convenient. They offer a quick way to get cash with flexible payment terms. But they come with a very high-interest rate and so you have to look out and be convinced you want to take such a loan. These are other things you need to know:

1. The law in Kenya doesn’t prevent payday loan lenders from giving out multiple payday loans
2. It comes with a very high-interest rate
3. Some payday loan lenders won’t give you a second loan if you already have one with them
4. The higher the amount you get or the more loans you get, the higher the interest rate.
5. Sometimes you might not be aware of other fees involved aside from the interest rate. You need to ask because the more likely you apply, the more likely you are to fall into the payday loan trap.
6. If you do not want to get a loan from a payday loan lender, there are additional payday loans like consolidation programs

Do you qualify for Payday Loans?

Do you qualify for a payday loan is an answer you will give yourself when you learn about the requirements and eligibility.

A higher rate of income, combined with good credit, lets you qualify for a payday loan. This is when a lender, or “lenders,” agrees to give you part of their cash for ‌letting you bring it back when you receive your next paycheck. 

The lender then expects that you have enough money to pay them back. The biggest advantage is that the lender doesn’t look too closely at your other credit references, only the amount of money you get in your next paycheck. Plus, it puts money into your pocket quickly and easily.

What are the Risks of Payday Loans

Payday loans can be a great solution for those short on cash in between paychecks or those who need a loan quickly, but you should know the risks:

1. Payday loans are typically small money loans that are due upon your next payday. They have high-interest rates.
2. They often expect you to pay the full amount owed all at once.
3. You might turn to refinance your payday loan. Refinancing a payday loan is not recommended as it may cause you to lose your rights to allow lenders to continue to take advantage of you.
4.  Even after paying off the original loan. It’s a vicious cycle that traps millions of Kenyans into an endless payday debt trap.

Where Can I Get a Payday Loan 

If you are wondering where to get the best payday loan, you ‌find ‌many lenders lead the way for payday loans.

Their unique loan approval process means ‌you can finally get money in your bank account fast. Ways to find them include:

1. Online via the web
2. Offline
3. Online via the loan applications e.t.c

What are the basic requirements for a Payday loan 

1. Be at least 18 years old and above
2. Be a citizen of Kenya
3. Have an active bank account or M-Pesa account and phone number
4. Provide some proof of income 
5. Show a valid identification.
6. Some lenders may require you have a Facebook account.

Documents Required to Apply for Payday Loans 

1. Proof of identity such as Kenyan national ID or passport
2. Proof of address in Kenya and utility bill
3. Document to prove your age 
4. Payslips, proof of income, or a letter from the employer
5. Passport photograph

How to Apply for a Payday Loan in Kenya

1. Visit the lender and collect the form
2. Fill out the form and provide all necessary information
3. Provide all required documents along with the completed application form
4. Wait for the loan approval
5. Once approved, get your loan

Payday loans interest

Payday Loan Interest generally is calculated based on the amount and duration of the loan. The first 30 days can have a daily interest rate of 0.5% to 30% or even more.

After day 30, this daily interest rate increases to 1% per day. By day 45, they will charge you at an APR of 700% using a 0.5% interest rate.

Payday loans amount

Payday loans can range between Ksh. 500 to Ksh. 100,000 depending on the lender. So with Ksh.100 loan amount with a Ksh.15 fee and a 15% interest rate for 7 days. You will repay Ksh. 115 in 7 days from ‌disbursement.

The maximum APR of Payday Loans

The Annual Percentage Rate can be up 706% or below or even more.

Maximum loan term of Payday Loans

The maximum loan term is 31 days. Be aware of this before you apply.

Other alternatives to Payday Loans

1. Family loans
2. Credit union
3. Cash advance
4. Bad credits loans

Can I get Payday loans with bad credit?

If your credit score is at least 640 or you have bad credit, you can apply for a small loan from some payday loan online lenders. Some lenders have made it easy and quick to find a bad credit loan that suits your specific situation. 

Best of all, applying online is risk-free. You can try with a small amount before you go into large amounts, with not much obligation but high cost and interest. 

Do I need to offer collateral for Payday loans?

Payday loans are short-term, unsecured loans. This means you can get a loan without having to put up any collateral and you have the option of paying back your loan at a stipulated time. But what does this mean for consumers? How can it help you?

It helps by making you get money fast, easy, and convenient but you have to be aware of the high-interest rate and other fees that come with it.

How old do I have to be to qualify for a payday loan

You need to be at least 18 years and above to apply for a Payday loan in Kenya.

Related searches- Can an 18 year old get a payday loan

Conclusion

Risks associated with payday loans range from high interest to high-pressure sales tactics. Payday loans are loans meant to be paid back quickly, usually the next payday, hence the name “payday loan.” Because they are typically small amounts of money (often used in cases of emergency). 

These loans often have very high-interest rates, making them an expensive solution to your money worries. It is great you know what it is and know you can qualify for it with a low credit score.

Do you qualify for Payday Loans? All you need is your proof of source income, proof of age, and other requirements.