There could be times in your life when you need more money than you have saved. In such cases, banks and NBFCs may help you with a fast and easy personal loan application. Loans may be a good funding choice for meeting the needs, whether they are for a crisis or costs for planned trips.
However, some people would likely be denied during the application process. This may be both baffling and quite irritating. That is why this blog will try to help you identify all of the probable causes for the rejection so that you may prevent it in the future.
Reason For Rejection Of Your Personal Loan Application
- Low income
This is crucial factor lenders assess when they disburse a loan and determine the payback time and tenure. They want to be assured that you will be able to pay the loan back safely. As a result, it is vital to have a solid, consistent source of income to qualify for fast loan approval & enjoy the finest loan perks.
If a person’s income is less than the needed limits or not regular, the chances of accepting the personal loan application may be reduced. This is why it is wise to manage your EMIs ahead of time. For example, if you’re asking for a personal loan, you may use the Personal Loan EMI calculator to get the exact amount.
- Low credit score
When you apply for a loan, the risk & underwriting function will check the credit information bureau’s credit profile. The most vital factor for a lender is assessing your credit risk profile and then choosing loan terms.
For a credibility check, CIBIL is the most regarded body in the business. A CIBIL score of 700 or more is considered a good score to certify a person’s form as credible.
But, if you have a poor credit score due to non-payment or late payment of prior EMIs, you may find it hard to get a loan in the future. So, if you wish to apply for a loan, ensure you have a good CIBIL score.
- Job insecurity
Money stability is needed for a personal loan application to be granted. Due to certain risk categorisation criteria, the lender may deny a person or firm with money instability.
Job changes, hopping, long pauses for work, and working with start-ups that are less well-known in the market and have less credibility may result in the rejection of the form. People operating as freelancers may also suffer rejection from the lender.
- Loan Purpose
Even if there are many types of loans, such as personal and house loans, lenders still look at the exact goal of your loan application. What the money is needed for, how it will be used, and so on are some vital factors that a lender assesses when approving your loan form.
So, be sure to research the sort of loan you want and which loan category best meets your present money demands. Once you’ve chosen the loan you’re searching for, you can submit your paperwork and get fast loan approval in no time.
- Existing loans at the time of the form
When you ask for a loan, banks and NBFCs may get their credit data via Bureau like Equifax, CIBIL, etc. Using these channels, they may assess your money and risk profiles based on loans taken from other money firms in India.
As a result, each possible lender would have info about your prior loans, like the loan amount, term, no check bounce, and, most crucial, prompt payment of EMIs. If these factors are good, you can get the amount you want at a lower rate.
Multiple loans exist when you apply for a loan. This lowers your chances of acceptance. Applying to many NBFCs or banks at the same time boosts bureau hit rates. It also reduces your chances of securing the loan.
- Sufficient asset needs
If a person or firm has a proper asset, they may get a good loan sum at a reasonable rate. Loan disbursement is a type of risk-taking in some ways. So assets give enough security & comfort to the lenders.
The asset needs for your loan may differ from lender to lender. Your personal loan application will most likely be refused if you do not fulfil a lender’s asset needs. As a result, be sure you have enough assets to cover the loan sum you want. Also, be sure to choose a lender that can give an amount and a rate equal to the price of your asset.
- Data in the form
The demographic data you gave in the personal loan application serves as the basis for the lender to accept the form in one shot. Other key facts such as income, employer name, occupation, work description, and other areas are vital factors that affect your risk categorisation. An NBFC cannot issue any loan for a consumer without the needed data.
- Too many loan inquiries
You should avoid making repeated loan inquiries to build on one of the previous points. This is one of the most regular errors made by people.
You may share data with many partners and platforms to obtain the best-in-class product across multiple categories, lower rates, best offers, and best payback term choices. But this is noted in the Bureau. It becomes an indication of multiple credits and reduces your credibility.
Getting a personal loan is not as simple as it seems. Makers know that a loan is often a last-minute need. But if your personal loan application is denied, the things covered in this article are worth noting for your future form. There are lower odds of loan denial if you apply with a lender that best matches your ability and needs.
If you are in a true crisis and want rapid cash, you might think of other loan choices such as a home loan, loan against stocks, gold loan, and so on. These have lower rates. Also, unlike a personal loan, they may be done with a normal credit score.
To learn more about the personal loan application, visit Piramal Finance for related blogs and explore their products and services.