Can I Get a Payday Loan on Unemployment?
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Payday loans are high-interest loans that have to be paid back within a relatively short period of time. If a person fails to pay back a payday loan, he will usually face large fees that can quickly total many times the size of the original loan. However, payday loans are relatively easy to obtain. While some companies will not allow people without jobs to take out loans, others offer loans to people with few or no financial resources.
One of the attractions of payday loans is that, compared to other types of loans, they are usually relatively easy to attain. While lenders making larger loans generally demand documentation that provides evidence of an ability to pay back the loans, payday lenders are often willing to extend credit to people who do not have a current source of income, or who only receive unemployment benefits.
Unemployment benefits are a source of income, albeit a temporary one. As of January 2011, a person receiving unemployment benefits could only receive payment for a maximum of 99 weeks, after which she was no longer eligible until after she had be rehired for a period of time. Because payday loans are such short-term loans, some lenders are willing to extend loans to people who will be continuing to receive unemployment benefits in the immediate future.
However, other payday lenders do not consider unemployment benefits to be a valid source of income. Instead, these lenders will demand that a borrower provide a recent pay stub from his job. Theoretically, a borrower who was recently fired from his job and who sought to take out a payday loan immediately after the termination could provide his last pay stub to the lender. So, while the borrower would be meeting the lender's requirements, his only income might be from unemployment benefits.
In some cases, payday lenders have absolutely no requirements for borrowers. All borrowers have to do is provide either a bank account number or a post-dated check for the amount of the loan plus interest and fees. When the loan comes due, the lender will withdraw the money from the borrower's account. If the borrower does not have enough money in the account to cover the debt, she will face additional fines and, potentially, a lawsuit.
Michael Wolfe has been writing and editing since 2005, with a background including both business and creative writing. He has worked as a reporter for a community newspaper in New York City and a federal policy newsletter in Washington, D.C. Wolfe holds a B.A. in art history and is a resident of Brooklyn, N.Y.