Personal loans are generally easy to avail, with most financial institutions approving and disbursing funds in a day. Lenders do not look into how you are utilising your funds. However, there is a possibility of your Personal Loan application getting rejected. So, let’s see the common reasons for Personal Loan rejection.
While you can apply for Personal Loans with multiple lenders, it may lead to Personal Loan rejection. This is because a bank usually draws your credit report from a Credit Bureau. Suppose your credit report shows that you have applied for multiple loans with different banks simultaneously. In that case, such financial behaviour questions your financial credibility as it makes you look distressed and may lead to Personal Loan rejection. So, you must enquire and apply for a Personal Loan with a single lender at a time.
Your Personal Loan application can get rejected if you have high debt. If multiple loans are open in your name and there is a delay in repayments, the lender will think that you are credit burdened. And when you look like a risky prospect, lenders may go on and reject your Personal Loan application. So, you must only take loans that you can repay easily and not go overboard here.
Before disbursing a Personal Loan, the lender needs to be assured that you can repay it. And to check your eligibility for the loan, the lender would go through your income. Your stable income signifies that you can pay back your Personal Loan EMIs on time. But if by any chance, you are not meeting your lender’s income eligibility criteria, it may lead to rejection. So, you must check your Personal Loan eligibility before filling out the loan application.
While both self-employed and salaried individuals can apply for the loan; however, stable employment is one of the factors for loan approval. But if your job is unstable, it can become a significant hurdle keeping you from availing a loan. If you switch jobs often or are unemployed for long periods, it may be challenging for you to get a Personal Loan. However, if you are employed and have been working with the same organisation for more than 1-2 years, it shows you have stable employment, and the chances of your Personal Loan getting approved significantly increases.
To avoid a Personal loan rejection, you must always ask your lender about the eligibility criteria for the loan you want so that you know for sure that you can avail the loan before starting to fill out the form.