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Top 10 reasons for a denied payday loan

Denied a payday loan? Here are some of the most common reasons why applications get rejected.

Wondering why your application wasn’t approved? We take you through some of the most common reasons why a lender may have decided not to work with you.

Can you get turned down for a payday loan?

Yes, although it doesn’t happen often, you can get turned down for a payday loan. The main reasons lenders deny payday loan applications is that they think you can’t afford to pay it back. Factors like too many negative marks on your credit report can also get your payday loan application rejected. Even if your application has been denied though, you might be able to qualify for a payday loan with another provider.

But first, take steps to ensure you won’t get rejected the next time around by reading about the top 11 reasons payday loans get declined.

1. You didn’t pass a credit check

Some lenders of payday loans do credit checks, while others don’t. If you’ve been denied a payday loan after a credit check, you might want to consider no credit check loans.

Finder survey: What do Canadians think impacts whether or not a payday loan application will be successful?

Response
Credit score21.36%
Have a recurring source of income19.77%
Any existing debt such as mortgage, credit cards or types of loans14.91%
Have a bank account14.76%
Employed by same employer for a certain period of time13.39%
Be a Canadian citizen or resident10.76%
I don't think any of these factors have an impact on a payday loan application5.04%
Source: Finder survey by Pollfish of 1001 Canadians, January 2024

2. You don’t have enough regular income

If you don’t have a regular source of income, many lenders will question your ability to repay your loan. While there are lenders who consider unemployed applicants, your acceptance usually hinges on a source of income – whether that be steady work or government benefits. Often, lenders require you to bring in at least $800 – $1,000 a month to qualify for a loan. If you don’t meet these criteria, it may be why you were rejected. Learn more about low income loans.

3. Welfare is your only source of income

Although there are lenders who accept borrowers on welfare, you’ll generally need supplementary income. If you only have welfare payments, this is could be a reason for rejection. Read our guide to getting a payday loan while on welfare to learn more.

4. You don’t have a Canadian bank account

Most payday loan lenders prefer to transfer the funds to a Canadian bank account and withdraw your payment directly from your account on the day it’s due. And even lenders who offer cash loans often look at your bank statements when underwriting your application.

5. There are overdrafts on your bank account

When you apply for a payday loan online, lenders may ask to see a copy of your latest bank statements. If your history shows that you’ve dishonored payments – that’s when a creditor has attempted to debit from your account and there wasn’t enough money — you look like a risk, and a risky application is more likely to be rejected.

6. You’re paid in cash

Being paid in cash can make it difficult for you to be approved. Lenders need to be able to verify your income, usually through your bank statements. If you don’t deposit the cash you receive into your account each pay cycle, then lenders won’t be able to verify it. Instead, you’ll need to find a lender who is willing to use your payslips as verification. If a lender couldn’t verify your income, this is a likely reason your application was rejected.

A similar problem can apply to people who receive payment in cryptocurrency. Many lenders won’t check your crypto wallet to verify your income.

7. You have a bankruptcy on your record

Lenders use your financial situation to determine the risk in lending to you. If you have a recent bankruptcy on your record (within the past 7 years), you may be flagged as high risk and rejected. However, there are still options for people with bankruptcy on their record.

8. You aren’t a Canadian citizen or permanent resident

In many cases, you must be a Canadian citizen or permanent resident to qualify for a payday loan. Even if you’re here on a work visa or student visa, payday loans may not be an option for you. That’s because payday lenders likely won’t accept cosigners to help you meet the residency requirement.

9. You aren’t old enough

In all provinces the legal age of the majority is either 18 or 19 years old. Some lenders also have their own minimum age requirements and won’t lend to anyone under 19, for example. Before you apply, make sure you aren’t too young to take out a loan.

10. You didn’t meet other minimum requirements

Before applying for a payday loan, you should make sure you meet the minimum criteria listed on the lender’s website. These criteria are set to establish who the lender will accept. If you didn’t meet all of the criteria, this is likely why you were rejected. In addition, lenders also have internal scoring systems where they allocate points to help determine your eligibility. If your score doesn’t add up, your application is unlikely to be approved.

How to get a payday loan after being denied

The first thing to do is double check your application to make sure all the information is accurate and that there aren’t any typos. Let’s say your monthly income is $1,000, but you accidently wrote $100 on the application – that could easily get your application rejected, but is also an easy fix when you reapply.

If all the information on your application is accurate, you still might be able to get a payday loan after being denied by applying with a lender that has looser requirements. Read our guide to easy-approval loans to learn more.

But if you were denied because you can’t afford the loan, there are many payday loan alternatives you can look into instead for more affordable options.

What are the most basic payday loan eligibility requirements?

Although all lenders have their own unique qualification requirements, they typically include the following:

  • Be the age of majority in your province or territory (18 or 19)
  • Be a Canadian citizen or permanent resident
  • Have a recurring income
  • Have a bank account

Bottom line

There are multiple reasons why you might have been rejected for a payday loan, but don’t be discouraged. You can review your application to make sure you didn’t miss any information before you apply with another payday lender. Not every loan option is right for you so be sure to consider all your options and compare the costs before applying again.

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Writer

Mary Brown enjoys finding money saving deals and sharing those tips with others. An avid adventurer, she explores the world in her free time (and is always looking for a good deal). See full bio

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Editor

Anna Serio was a lead editor at Finder, specializing in consumer and business financing. A trusted lending expert and former certified commercial loan officer, Anna's written and edited more than 1,000 articles on Finder to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in publications like Business Insider, CNBC and Nasdaq, and has appeared on NBC and KADN. Anna holds an MA in Middle Eastern studies from the American University of Beirut and a BA in Creative Writing from Macaulay Honors College at Hunter College, CUNY. See full bio

Anna's expertise
Anna has written 63 Finder guides across topics including:
  • Personal, business, student and car loans
  • Building credit
  • Paying off debt

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