An incredible amount of research goes into applying for a personal loan. Applicants study the length and breadth of the financial market to locate the most appropriate personal loan for them. They compare the terms and conditions laid down by personal loans offered by various banks and lending institutions.
The objective is to get a loan with as low an interest rate as possible. This can be done after careful consideration of various personal loans and once applicants calculate personal loan EMI. Some of the factors required to approve a personal loan are a good credit score, stable income, no default record, and existing financial liabilities. But what about the reasons for the rejection of an application? Here are some of the most unexpected reasons why personal loans are rejected –
Ensure that the signature you use is uniform across all personal loan documents, forms and papers. Of course, no two signatures can be identical in every aspect since they are executed by hand. However, you should not have changed your signature entirely. Make sure all signatures are as close to each other as possible. Any mismatch can lead to a rejection of your personal loan.
Lack of NOC from the previous lender
If this is not your first personal loan, you will be required to close your previous one and obtain a no-objection certificate (NOC) from the previous lender before getting a new loan. The lender you are presently approaching will reject your personal loan if your NOC is missing. The NOC will be reflected on your CIBIL report, and the lender will carry out a check of this report. Ensure you secure this document before you apply for a fresh personal loan.
Errors in the credit report
Your credit report records all your previous loans, credit cards, and repayment statuses. Your past track record shows the bank whether you have the capacity to repay an upcoming loan. Your credit score also depends on your personal finance hygiene. A lender will decide to grant you a personal loan based on all these factors. In fact, the rate of interest applicable to your loan amount will also be informed by your credit score.
Your credit report contains all information about your finances, and any errors in this information can lead to the rejection of your application for a personal loan. Check if closed accounts are shown as open, PAN and address details are accurate, and repayments are correctly recorded. You must review your credit report properly before applying for a fresh loan.
Bank’s defaulter location list
Banks keep lists of locations and addresses of the applicants who are more likely to default on loans than others. Unfortunately, if you live in such a location, the chances are that your personal loan application will be rejected. All your other documents and credentials may be in place, but this particular detail can derail your personal loan application.
Unstable source of income
Banks and lending institutions may reject your application if your income is unstable. Lenders grant loans to applicants who have stayed in a job for longer than a year, indicating income stability. Banks tend to be reluctant in extending personal loans to individuals who frequently switch jobs, are freelance workers, or are pursuing other careers that offer unstable income.
When researching for a personal loan, remember to check off items on both the dos list and don’ts list. Assess your credit score and spot in advance any reasons why your personal loan application may be rejected. To avail of a personal loan with minimal processing fees such as the one offered by Finserv MARKETS, such due diligence is necessary. Upon successful application, you can get up to Rs. 25 Lakhs in a personal loan with interest starting at 10% per annum.