8 Important Things to Keep In Mind to Avoid Loan Rejections
Taking a personal loan in itself is an important decision. Even before you apply for a personal loan you need to set the proper groundwork. Gathering all the relevant documents, fixating on the amount of the loan, checking one’s CIBIL score etc., everything needs to be in place when you apply for the loan. A loan rejection acts as a roadblock and can affect your future applications too. Here we bring you a few things that you should keep in mind to avoid personal loan rejections.
- Sufficient Income
When you apply for a personal loan, the lenders take into consideration the amount of income you have at the end of each month. Ideally, the amount of loan that you are eligible for is 60 times of your monthly salary. Every bank or NBFC who provide personal loans will have a minimum income requirement. You need to know what the exact number for the requirement is.
- Stable Job
The lenders do a background check and look at your job history. The reason being that, if you are someone who jumps jobs frequently, then you become a liability and less likely to be a good customer who can repay the loan. If you wish to take a personal loan then you should aim for a stable job which will give you a steady income.
- CIBIL Score
The lenders also look at your previous CIBIL score. It is of prime importance that your credit score is impressive. If you have a bad CIBIL score then the lenders have a valid reason to reject your loan application.
- Employment Requirement
There are many sources to earn money from. As mentioned above, you would need to have a job which pays you money regularly. Yet, jobs like freelance work would not be an ideal deal to avail a personal loan. Banks and NBFCs have requirements such as having a job with a reputed company, at a particular position for a certain amount of years. As you have to pay monthly EMIs, your job plays an important role to give the lender confidence that you will pay back the borrowed money. You can calculate the EMIs using a personal loan EMI calculator and get a know-how of your application.
- Faulty Documents
Every personal loan application requires you to submit various documents. You need to get a list of every possible document required for the loan from the lender beforehand. If the documents are incorrect, faulty or insufficient then even though you meet other conditions, your loan can still be rejected by the lender.
- Eligibility Criteria
There are certain eligibility criteria which you need to pass in order to be eligible for availing a personal loan. Minimum age of the applicant should be 21 years while applying for the loan and maximum should be 60 years at the time of completion of the loan. The amount of minimum take-home or net income should be Rs.25000/- per month. These are a few conditions which the lender will have. They have personal loan eligibility calculator which can help you to see whether you are eligible for the loan or not.
- Debt to Income Ratio
Your debt to income ratio is an indicator of how responsible you can be with your payments. The debt to income ration should be low if you want your loan to be approved. If it is high it shows that you have a lot of things to pay for such as your credit card bills, car loan, another kind of loans etc. The smart way would be to pay off these outstanding debts and then apply for a personal loan.
- Good Repayment Habits
If you have taken loans in the past and have repaid them on time, then any lender will consider you as a worthy applicant. Good repayment habits showcase the discipline and seriousness of the applicant. This can fetch you a loan easily.
If you keep in mind the above 8 tips, then the chances of loan rejection will be close to zero.