Most banks and non-banking financial institution have laid down their own eligibility criteria for granting a loan. Major factors considered under these criteria include your age, monthly/annual income, interest to income ratio, total loan amount, loan tenure, etc. It is only after fulfilling these eligibility criteria that the borrower is granted a loan. The chief reason to set such strict criteria is to ensure that the borrower would be able to repay the loan amount to the bank.
Depending on the type of loan to be borrowed, the eligibility criteria may vary. For instance, a personal loan demands a very basic eligibility when compared to a business loan or a home loan. Even if you fulfill all these eligibility criteria, there might still be some unexpected things responsible for rejection of a loan application.
Thus, at the time of applying for a loan, make sure that the following factors do not hurt your chances of loan approval-
Taking constant debts
if you have the habit of constantly borrowing from others, the bank might find you less worthy of repaying the loan. This might be because you already have existing debts on your name and repaying the debt of a new loan would just add to the burden. Thus, a bank or any other money-lending financial institution might find you to be a risky applicant for granting a loan and reject your application, even if you fulfill all the eligibility criteria.
Unstable income source
If you have an unstable source of income and are not able to convince the bank about your loan repayment capability, your loan application might get rejected. Most banks or other money-lending institutions might hesitate to process your loan request in case you are a frequent job hopper, freelancer, or engaged in a career that does not guarantee a fixed source of monthly income.
Previous rejection of loan application
It might be the case that you would have experienced a rejection of loan application in the past. This rejection could have been for any reason, such as low CIBIL score, not being able to meet the eligibility criteria, failing to adhere to the terms and condition of the bank, etc. In case you have worked on these pitfalls and reapply for a new loan, the banks might still reject your application if you fail to convince them of your current creditworthiness.
Co-Applicant’s Poor Credit Record
Some banks allow you to sign a co-applicant if you want a large amount as a personal loan. A co-applicant can help reduce the burden of the loan repayment and would be equally held responsible if you default on your EMI payments. Though most of the borrowers prefer to choose their spouse or either of the parents as a co-applicant, it’s important that the co-applicant, fulfills the loan eligibility criteria as well. Banks might reject your loan application in case your co-applicant has a low credit score or have less debt to income ratio.
While these are just a few personal loan rejection reasons, as a borrower, you need to maintain some vigilance while applying for a loan. Before approaching any bank or financial institute, make sure you clear off all your existing debts and have a backing of a strong credit score. In case you are applying for a loan with a co-applicant, make sure that you go through the credit background of your co-applicant to avoid getting your loan application rejected.
You can visit Finserv MARKETS to apply for the Bajaj Finserv Personal Loan Finserv MARKETS assures fast online processing at minimal documentation. The Bajaj Finserv Personal Loan offers complete transparency in all your financial transactions. With Finserv MARKETS, you get to choose from a range of customized personal loan options. To know more, get in touch with our representatives at Finserv MARKETS today!
Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and exclusive EMI store, all under one roof- anytime, anywhere!