A cash advance is meant to be a short term solution for an unexpected problem. Many borrowers take out a payday loan to make a  car repair, pay a utility bill or to avoid an overdraft. These advances are used for a variety of reasons, but misuse of them can create a situation in which the borrower cannot get free without help from a professional payday loan consolidation company.

Cash Advance Process

In most instances, a lender will require certain documentation in order to establish a person’s identity and to approve a payday loan. These documents are a federal or state issued identification, utility bill, references and a copy of the borrower’s most recent bank account statement. Once produced, the documents are copied and the lender gives the borrower a cash advance in exchange for a post-dated check.

Negative Balance Bank Accounts

If a borrower’s bank account is overdrawn and the statement shows a negative balance, the lender might not approve the loan. However, each lender is different. Some will approve the loan to bring the borrower’s checking account up to a positive balance. Borrower’s with a statement not showing a negative balance–even if the account is currently overdrawn–will likely be approved.

Current Relationship with a Payday Lender

Borrower’s having a post-dated check returned for insufficient funds from the cash advance company will typically not be eligible for another loan until the last one is reconciled with cash, certified check or money order. However, some lenders might approve an additional loan, rolling the previous loan balance into the new amount. The lender will probably charge an additional fee.

Borrower Account Audits

Borrowers having a relationship with a lender seeking loans on a periodic basis might be asked for a copy of the most recent bank statement. Lenders ask for an up-to-date statement to ensure the borrower’s checking account is not overdrawn and/or still active. If a borrower cannot produce an updated bank statement or the statement shows a negative balance, the lender might call any outstanding loans and terminate the relationship. If this occurs, the borrower can no longer take out additional loans from that particular lender. Borrowers not able to repay loans should seek the help of a cash advance consolidation firm.