In 2025, payday lenders must check a borrower’s ability to repay (ATR) before they issue a loan.
This rule protects borrowers from taking on debt they can’t manage and stops lenders from approving risky loans.

The good news?
Modern lenders use fast digital tools to verify ATR without slowing down approval.

What Lenders Look At to Assess Ability to Repay?

1. Your Income Consistency

Lenders check your income sources over the past 30–90 days to see if you earn money regularly.

They look for:

• Weekly or biweekly paychecks
• Gig payouts
• Freelance deposits
• Benefit payments
• Cash app transfers (if frequent and consistent)

This helps them figure out if you can pay back the loan on your next payday or due date.

2. Your Average Monthly Income

Lenders don’t just look at one big or low paycheck; they look at your deposit habits to figure out your average monthly income. This shows your financial soundness more accurately.

3. Spending Behavior & Essentials

Payday lenders don’t judge how you spend, but they do look for predictable expenses like:

• Rent
• Utility bills
• Car payments
• Groceries
• Subscription services

This helps determine if your budget can realistically handle a loan repayment.

4. Overdraft & NSF Activity

Lenders often check how often your bank account has been:

• Overdrawn
• Hit with NSF (non-sufficient funds) fees

A few overdrafts won’t disqualify you, but if you have them often, it could mean you’re having money problems.

5. Account Balance Trends

Instead of only looking at your balance on one day, lenders look at it over time.
Even if your balance becomes low periodically, regular gains after deposits show that your cash flow is strong.

6. Employment or Income Source Stability

Traditional job?
Gig worker?
Freelancer?
Multiple income streams?

Lenders want to see consistency, not perfection. Modern underwriting tools now support nontraditional workers better than ever.

7. Loan-to-Income Ratio

Lenders check your finances so you don’t take on more than you can comfortably repay. You qualify more easily for smaller, lower-cost loans.

8. Existing Loan Obligations

Some states restrict:

• Multiple payday loans at once
• Rollovers
• High cumulative balances

Lenders check whether you already have an outstanding short-term loan.

Tools Used in 2026 to Evaluate Ability to Repay

Automated Income Verification (AIV)

Instantly reviews your deposit history.

Transaction-Based Underwriting

Analyzes real-time spending patterns.

Open Banking

Securely connects lenders to your bank to verify financial activity.

Soft Credit Checks

Check your overall credit health without hurting your score. These tools speed up, make it more fair, and make it more accurate.

How Borrowers Can Improve Their ATR Score

• Avoid overdrafts for 1–2 weeks before applying
• Maintain consistent deposits
• Keep some funds in your account
• Borrow only what you need
• Use one primary bank account for income

Even small changes improve approval odds.

Final Thoughts

The “ability to repay” evaluation isn’t meant to reject borrowers, it’s meant to ensure loans are affordable and safe. With new technology and smarter underwriting, payday lenders in 2025 can assess ATR instantly, allowing fast funding without unnecessary risk.

Need a loan that matches your budget?
Apply through FundMyWeek and get paired with lenders who evaluate ATR fairly and approve loans quickly.

Also Read:

• How Automated Income Checks Speed Up Payday Loans
• How to Get a Payday Loan Without a Traditional Job