Reasons for the rejection of your Personal Loan Application
Posted on: 09/May/2018 12:41:05 PM
Simple Formalities and Verification process, Usage Liberty and Non-requirement of any Collateral security are some of the primary reasons for people choosing Personal loans for their urgent money needs.
Even though acquiring a personal loan is very simple when compared to other forms of loans like Housing, Vehicle and Collateral loans, there are certain criteria in which the bank operates and choose your application for successful sanction of your loan application.
Now let’s see some of the important reasons through which your bank rejects an application of personal loan.
Credit History
Credit History plays a major role in determining the sanction of your personal loans. The bank can decide on the ability of a person’s money flow only through your credit transactions with a good score. Proper Credit card repayments and EMI payments add on to the total credit score to your account which can sometimes increase the level of personal loan eligibility. Late Bill payments and other delay in repayments of old borrowings can result in low points making the bank to decide against your application of personal loan.
The pathetic situation is for those who have not acquired any form of credit in their transaction history. Banks will form a security and repayment doubt in the customers who so not have a credit history and on contrary they receive rejection for their fresh application of loan or sometimes they are offered with high interest rates for the applied personal loans.
Eligibility Criteria
Banks have various eligibility criteria for different loans depending on the credit, age, work, business and the local residential address confirming the presence of the borrower. So the initial calculations of the loan eligibility and the proper providence of details plays a key role in banks deciding for your favor. Your application may get rejected in the initial stages itself if you do not follow basic eligibility requirements requested form the bank. So try to have a complete analysis of your loan application with various private portals and Apps that can help you to calculate the total principal amount and all other details regarding the application and repayment of the particular loan.
High Fixed Income to obligation ratio
FOIR- Fixed Income to obligation ratio defined as the proportion of borrower’s income paid out as the monthly installments for the EMI transaction they used for the earlier borrowings in various purchases. Most of the banks prefer individuals who have maximum 40 to 50 percent in FOIR and those criteria beyond the threshold FOIR points have a high possibility for rejection.
Employment History
Frequent Job Hopping and large gaps between different employments can reduce the possibility to get a successful sanction of personal loan. An individual can opt for any number of job changes and field shifting for their own career and personal development. But the Banks’s criteria falls in favor of Multi-national Companies rejecting anyone’s loan application who have a history of changing jobs usually.
Documentation
Proper Documentation is the basic necessity for any loans gettining correctly verified and to escalate for the next stages of sanction process. Salary Receipts, Personal Identification Documents that exactly match your name and address in all the documents submitted and the input of employment details are some of the main documentations required for the eligibility to acquire personal loans. If any of the documents differ in details and do not match the required criteria of the lender your loan application may get rejected in the earlier stage itself. Verify all the ID’s, Salary bills and other details before submitting it to the bank and also make sure all the details reflected in every documents do not mismatch anywhere.
