A personal loan as an instrument is widely preferred by those consumers who need funds quickly and do not want to provide collateral against it, but banks and NBFCs might deny the application of a personal loan on the basis of any kind of discrepancy they find, the reasons behind decline the rejection can be one of the following:
1. Poor credit score: To assess a customer's creditworthiness, both banks and finance firms review their credit score rates. Since a Personal Loan is unsecured, lenders depend on the credit record to determine whether or not to lend. Only if you have a CIBIL score of 700 or higher would leading Indian banks accept your loan. To retain a decent credit score and reduce the likelihood of loan denial, make sure to pay all credit bills and EMIs on time.
2. Insufficient Eligibility: Lenders look at your monthly salary and see how you'll be able to pay back the loan. You'd still have to file salary statements to prove your financial eligibility. If you don't meet the lender's income criteria, your loan is likely to be denied. Calculating your loan rate eligibility and applying for a loan amount that you are most likely to be eligible for will help you get a loan.
3. Employment: the rate of interest provided to you is determined by your designation and business profile. The larger and more reputable the corporation you work for, the higher your chances of getting the loan accepted. Banks look at your profession and company longevity when determining your repayment potential, and a shaky job experience will hurt your chances of getting approved.
4. Mistakes on the application form: Making mistakes on the application form is normal. Small mistakes and omissions, such as losing vital information or entering incorrect information, will result in a loan application being denied. Similarly, it's important to keep an eye on your credit score and flag any reporting irregularities so they can be fixed before your loan application is turned down.
5. Several inquiries: A portion of the credit report highlights the prospective borrower's loan inquiries. Many and parallel credit inquiries in a limited amount of time will increase the likelihood of a loan application being rejected. It represents your need for a loan and your failure to obtain one from other financial institutions.
6. Age requirement: Personal loans are typically issued to individuals in a certain age range, typically 21 to 60 years old. If you are too young or too old, your personal loan application is more likely to be rejected. Furthermore, they are usually only available to consumers who have a steady stream of revenue.
7. High debt balances: Whether you haven't been paying down your loan balances or are using so many of your usable credit, your payment is likely to be denied. Reducing your loan balances by then using a portion of your available credit will assist you in getting accepted.
8. Non - secured Loans: When applying for a personal loan, the ratio between secured and unsecured loans is crucial. Your personal loan application's chances of acceptance are reduced if you have more new unsecured loans than secured loans.
Other than the above the bank might state that you do not qualify as per their eligibility criteria, to illustrate this we can check the criteria for eligibility of Axis Bank Personal Loan, which are as follows:
Eligible applicants: Employees on a Salary, Employees in different public and private corporations that are salaried doctors, Workers in the government system, including employees of Public Sector Undertakings, Central and Local Bodies.
Age limits: Minimum age is 21. At the time of personal loan maturity, the median age is 60 years.
Monthly net income: At least Rs.15,000.
Kommentarer