June 28, 2019
A personal loan is an unsecured loan that individuals take from banks or non-banking
financial companies (NBFC) for personal expenses. Personal loans do not need to be backed
by any security or collateral. Most people opt for a personal loan when they are in urgent
need for money. They take a personal loan for wedding expenses, holidays, buying a new
phone, further education expenses, medical emergencies, etc.
If one submits the proper documents and completes the procedure according to the bank or
non-banking financial company, then the loan is quickly approved. However, there are times
when the loan can be rejected. 5 of the most common reasons a personal loan can be
rejected are:
1) The annual income does not meet the criteria- Most lenders make the minimum
income requirement quite clear. If you apply for a loan and your income does not
meet their criteria, then your loan application will automatically be rejected. Thus,
before filling out the application form and wasting your time, speak to your lender
about your eligibility. There are some NBFCs who do not make your income the most
important aspect.
2) Unsteady history of employment- If you have a history of quitting jobs frequently,
then there is a chance your loan application might be rejected or the personal loan
interest rate offered to you will be higher. Lenders prefer to offer a personal loan to
people who have had a stable job or business for at least 3-6 months because it is
less of a risk when it comes to repayment.
3) Multiple loan applications- Applying for multiple loans can affect your credit score
negatively. The lenders will assume that you cannot handle your money properly and
you are hungry for borrowed money, thus immediately rejecting your application. If
you wish to avoid this, do in-depth research about personal loans offered by
different banks and non-banking financial companies (NBFCs). Once you have
enough information, then only apply for the personal loan you want.
4) A mediocre credit score- If you are applying for a personal loan, your credit score is
going to play a huge role in whether your application gets accepted or rejected and
what the personal loan interest rate is going to be. A score close to 900 is considered
great and you will have some power when it comes to negotiation of the interest
rate. If your credit score is less than 750, your application will most likely be rejected.
5) Lack of proper documentation- The internet has made it easier to apply for a
personal loan. All you have to do is fill out the application form and provide all your
documents. The lender then verifies the documents and approves the application.
However, if the information you provide is improper or inconsistent, they will
immediately reject your application. Therefore, it is very important to check all your
documents before you submit the online application form.
We understand that sometimes, applying for a personal loan can get quite confusing. We at
InCred want to make your life easier and make sure your process is flawless. Whether you
are taking a wedding loan or a travel loan, we will be there throughout and make your life
simple and easy. So borrow with InCred, borrow with confidence.