There may be times in our life when we immediately require more money than what we have as savings. In such situations, NBFCs can help a person quickly and easily apply for a loan on a user-friendly platform like Finserv MARKETS. Be it for an emergency purpose, for leisure or expenses for planned vacations, loans can prove to be a helpful funding mechanism for meeting such needs.
However, it is possible that some people might get rejected during their application process. This can be both confusing and incredibly disappointing. Which is why this blog aims to help you identify all the possible reasons for the rejection, so you can avoid it in the future:
Low credit score
Once you apply for a loan, say, on a platform like Finserv MARKETS, the first process carried out by the risk and underwriting function would be to check your credit profile in a credit information bureau. For a lender, the most important criterion is assessing the credit risk profile of the applicant and then decide the lending terms and conditions.
CIBIL is the most respected entity in the industry for a credibility check while the other bureaus in India are Crif High Mark, Experian and Equifax. A CIBIL score of 700 or above is generally considered to be a good enough score serving to qualify a person’s application as credible.
However, if you have a low credit score due to late or non-payment of previous EMIs, this can seriously affect your chances of qualifying for a loan in the future. So, if you want to apply for a loan, make sure that you have maintained a healthy CIBIL score at all times.
This is another important prerequisite to help lenders decide the loan amount they feel comfortable disbursing along with the repayment period and tenure. Therefore, it is important to have an appropriate, regular income source to qualify for instant loan approval and enjoy the best benefits while availing loans.
In case a person’s income is lower than the required criteria (depending upon the loan amount) or is volatile, the chances of getting their application for a loan approved may reduce. That is why it is best to plan your EMIs beforehand. You can make use of the Personal Loan EMI calculator (if you’re applying for a personal loan, for example) on Finserv MARKETS and enter your ideal amount and tenure to find out the right EMI amount for you.
Instability of Job
Financial stability is very important for an individual to get their application for a loan approved. A person or entity with financial instability or volatility may end up declined by the lender due to specific risk classification criteria. Frequent job hopping, long breaks, working with start-ups which are less recognised in the market and thus with low credibility may end up resulting in the rejection of your application. Similarly, individuals working as freelancers may also face a situation where their application may get declined by the underwriter.
Outstanding loans at the time of application
When people apply for a loan, banks and NBFCs can access their credit details using Bureau data (like CIBIL, Equifax, etc.). Through these channels, they can ascertain the financial and risk profile of people by the loans they availed from other financial institutions in India.
Hence, any potential lender will have information about your previous loans such as the loan amount, tenure, no cheque bounce and most importantly, timely payment of EMIs. If these details are favourable, it will help you in getting the amount you seek at a better interest rate.
Multiple loans existing at the time you apply for a loan reduces your chances of approval. Similarly, one should not apply at multiple NBFCs or banks at the same time as it increases the bureau hit rates. It also sends multiple enquiries by different lenders at the same time which ultimately reduces the chances of you getting the
Purpose of Loan
Though there are separate categories of loans like personal loan and home loan, lenders still check the specific purpose of your application. For what purpose is the money required, what would be the use of the funding and so on, are some important aspects that a lender looks at while approving your application for a loan.
So, make sure to do a thorough research of the exact type of loan you need and which category of loan most suits your current financial needs. If you are looking for further details, you can find them on Finserv MARKETS where you can browse the various benefits of each type of loan available there. As per your financial needs and goals, you can take your pick from home loans of up to 3.5 Crore and flexible repayment tenures of up to 300 months, personal loans of up to 25 lakhs with unlimited withdrawals and business loans of up to 30 lakhs for both start-up and MSME needs. Once you’ve found the loan you’re looking for, you can submit your documents and get instant loan approval in no time.
Sufficiency of collateral requirements
It has to be noted that an individual or entity can find a good loan amount at a competitive interest rate if they have adequate collateral to offer. Since loan disbursal is a form of risk taking in a way, collaterals provide adequate security and comfort to the lender.
Collateral requirements for your loan can vary from lender to lender. If you do not meet the collateral requirements for a lender, your application is certain to be rejected. So, make sure to have adequate collateral against the loan amount you desire. Also, make sure to find the right lender who can offer an amount as well as interest rate that is equivalent to the value of your collateral.
Multiple enquiries for Loan
To expand upon one of the points mentioned earlier, one should avoid sending multiple enquiries for loans. This is amongst one of the most common mistakes committed by people during their application.
In order to get the best-in-class product across different categories, lower interest rates, better offers and best options of repayment period, a loan applicant might try to share data with multiple partners and platforms. However, this ends up getting stored in the Bureau, becomes a sign of multiple credit and results in the credibility downgrade of the loan applicant.
Details in the application
The demographic details of a customer in the application form becomes the basis of information for the lender to approve their application in one go. Other critical details like, income, occupation, employer name, job details and other categories are important parameters to decide on the customer’s risk classification. Understandably, without the right information, it is impossible for an NBFC to approve any loan for a customer.
It is more common than people realise for their application documents to either be incomplete or inadequately submitted. The application process overall can seem pretty lengthy and complicated, so this is a common occurrence.
That is why Finserv MARKETS is the best option for someone seeking to apply for a loan in the simplest, quickest way with minimal documentation. Finserv MARKETS is a transparent digital portal trusted by 100 million customers across India. It is secure as well as convenient, with the entire customer data stored digitally, which provides you with instant approval of your loan in a matter of few minutes.
On Finserv MARKETS, you can avail personal loans, business loans and home loans among others with minimal documentation. You can avail personal loans of up to 25 lakhs, business loans of up to 30 lakhs and home loans of up to 3.5 Crore, all with flexible repayment options.
If you want to avail maximum benefits, you should download the Finserv MARKETS App, which comes with a multitude of facilities designed specifically for your ease and comfort. The Finserv MARKETS App offers you a personalised experience with the facilities of tracking your loan account, paying your loan EMIs/part-payments in a smooth, speedy and secure manner through their UPI platform, availing exclusive deals and offers and having money deposited in your bank account within 24 hours. At any point, if you find yourself in need of assistance, simply download the Finserv MARKETS App and the chatbot YARA will solve your queries in a jiffy. With just a few quick, hassle-free steps you can do everything from applying for a loan to paying the loan EMIs in a timely manner.
Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor-made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no-cost EMIs to 4 hours of product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.