Yes, it is possible to borrow a payday loan on behalf of someone else, such as a relative. However, it is important to note that both the background and credit checks, as well as the application as a whole, will be under your own name. As such, once the payday loan has been approved in your name and received in your bank account, you will then be able to transfer the funds to your relative.
This is a risky situation to be in as it is you who will be liable for the loan, not your relative. Before doing so, you should always encourage your relative to apply for a payday loan themselves.
This is because if they do not pay you back in full, it is up to you to repay the lender with the full amount.
Key Points For Borrowing On Behalf Of A Relative
- You are able to take out a payday loan on behalf of a relative but it has to be in your own name. You cannot apply for a payday loan using their details
- The risks associated with the payday loan will all be in your name
- In some instances, you may be able to co-sign for a payday loan with your relative
- 21% of Americans have cosigned for a loan
- 35% of Americans have helped a relative financially with payday loans
Why Would A Relative Ask Me To Apply For A Payday Loan For Them?
There are a number of instances where a relative may ask you to apply for a payday loan on their behalf. It could due to their poor credit rating, having too many existing loans or they could be out of work.
If you have built your credit score up over a number of years, you may have a strong rating compared to your relative. With a good credit rating, you will get better rates for both interest and repayment terms. If your relative has a poor credit score then they might want you to apply for a payday loan to take advantage of the lower amount of interest they have to pay.
To apply for a payday loan you must be a US resident – this is one of the key eligibility checks required by lenders. Your relative might not be able to apply if they are not yet a US citizen. They might ask you to apply on their behalf because they are not eligible.
Is It Illegal To Get A Payday Loan For a Relative?
No, it is not illegal to apply for a payday loan for a relative if the application is made in your own name. You cannot apply using their details.
Even if you are taking out the money for someone else you will still be liable for repayments.
Is It Risky To Take Out A Payday Loan for a Relative?
Yes, it is risky. This is because despite the motive behind taking our the loan for your relative, it is still you who is responsible for paying it back. It is your name, it is your credit history, and your bank account that is listed on the application form. Therefore the lender has made an agreement with you, not the person who ends up with the money.
This makes it very risky for you because you essentially will have no control over whether this money can be repaid.
What If I Don’t Want To Apply For A Payday Loan for a Relative?
If you don’t want to apply for a payday loan for a relative then there are some other options available. One of these options is to lend the money to the person yourself. This is actually a less risky option because even if the person does not not pay you back in full, you will not be required to pay interest to a payday loan lender and risk having your credit rating damaged.
It is still risky because they might default on their repayments to you, but definitely less risky than going through a payday loan lender.