Yes, it is possible to apply for a payday loan on behalf of your family or friends if they are struggling to borrow money due to their financial past. According to a survey by Bankrate, 21% of Americans have cosigned for a financial product like a loan in order to help out a loved one.

However, there is a lot you should consider before doing so, such as whether you are eligible for a loan and can comfortably afford the repayments. Most importantly, you must make sure your relative or close friend will be able to pay you back as if you apply for a loan on behalf of someone and they default, you will be liable for the late repayments and subsequent penalties since the loan will be in your name.



Is It Legally Possible To Apply For A Payday Loan On Behalf Of Family Or Friends?


Yes, it is legally possible to get a payday loan for someone else as you will not need to reveal why you are taking out a payday loan, you will just need to be able to qualify for it by being a US resident aged over 18 years old, earning a stable income of approximately $800 each month and having a live checking account for the funds to be deposited into. Although you would be taking the loan out for a family member or friend, as far as the lender is concerned, you will be responsible for repaying back the loan since your name will be on the loan contract and the legal responsibility will fall on you.

This means that any consequences of missing a payment will be placed upon you as only you are liable to repay the loan, plus interest. So you should only borrow a payday loan for an amount of money you are comfortable with and that you are certain you will be able to repay back when the repayment is due, irrespective of your family member or friend paying you back.


Why Would I Apply For A Loan On Behalf Of My Family Or Friends?


The main reason you might consider applying for a loan on behalf of family or friends is to help them during a time of financial need. Giving them a quick injection of cash could help them if they faced an unexpected bill such as an auto repair cost or medical fee. Perhaps your confidante may want to consolidate their debts or take out a loan themselves but are unable to due to an extremely poor credit rating.

Other reasons may be that the borrower has just moved to the US and is still waiting to receive a permanent address which means that they cannot qualify for the eligibility criteria of borrowing a payday loan. Or perhaps they have only just turned 18 years old and do not have enough of a credit record to take out a loan or credit card. In these cases, although they may still be comfortably able to repay a loan, applying on their behalf can offer a huge relief to help them out of financial difficulties.

There is also the option to be a cosigner whereby a person agrees to be legally responsible to pay back a debt if the borrower is not able to pay back the loan as agreed. This is usually arranged if the borrower is unable to qualify for the loan on their own due to poor credit records. Indeed, Bankrate found that parents of adult children often act as guarantors and co-sign for loans, with many parents having to financially support their grown up children for much longer than ever before.

Whatever the situation is, taking out a loan on behalf of a close person could really help them get back on their feet. It is just essential to make sure that they will be able to comfortably afford repaying you back before agreeing to do so. In some cases, if your relative is reliable and repays the debt to you on time and no repayments are missed, you may even increase your credit score. 


What Should I Consider Before Applying For A Payday Loan On Behalf Of Family Or Friends?


Before you apply for a payday loan on behalf of someone close to you, it is worth questioning whether their reason for you taking out the loan are good enough. Make sure you find out why you are doing this for them, so that you categorically know it is for a valid cause, that they truly need it and are not using the money for frivolous spending such as shopping or gambling. 

Bear in mind that there is a chance they may not be able to repay you, and the impact this could have on your relationship. Not only could this lead to tension between the two of you, but if you struggled with repayments you could face late fees and a damage to your credit score as you will be legally responsible for the debt even if you are borrowing on behalf of someone else. Make sure you prepare for the worst case scenario so that you have covered yourself in case they fail to repay you.

It is also worth creating a written contract between you and your close friend or family member, with an agreed timeframe for when they will repay you back and the exact amounts, including the interest and any other potential fees. This will help to avoid any miscommunication and ensure that you are repaid in a clear and organized manner.


 What Are Alternatives To Applying For A Payday Loan For Family Or Friends?


If you are reluctant to apply for a payday loan on someone else’s behalf, there are many alternatives to payday loans you can both consider. If possible, you could lend them the money personally as this way you would not be liable to a loan contract, can avoid interest fees and not have to worry about potential damage to your credit score.

Another option is if your close family or friend asks their employer for financial assistance. Often companies will have schemes in place to support their employees such as advances of pay so you could always recommend that they look into this.

You could also suggest that your relative or friend sells any unwanted items they have through a garage sale or online platforms such as eBay. Or you could encourage them to get a second job or side hustle to help boost their savings.