5 of the Most Common Reasons for a Rejected Personal Loan
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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.