Various financial institutions in India offer personal loans with exclusive benefits, attractive rates of interests, nominal processing fees, etc. The minimal eligibility criteria make it even more affordable for all. However, not every unsecured personal loan is approved by lending institutions.
Reason 1: Documents or details are incorrect
Remember that lenders thoroughly verify every document to check the borrower’s authenticity. So, submitting any document with incorrect information can lead to the rejection of a loan application. It’s best to prepare a checklist of all the documents required by a lender and thoroughly check them before submitting.
Reason 2: Inadequate income
Financial companies assess a borrower’s income and liabilities to evaluate his/her personal loan repayment capability. So, they can reject an application on the following grounds –
-The borrower has an unstable income to support the monthly repayments.
-The borrower currently has a temporary job or is on a probationary period.
-His/her FOIR is more than 50% of this income per month.
A short note on FOIR
FOIR or Fixed Obligations to Income Ratio is an eligibility parameter which reflects a borrower’s disposable income. It is derived by considering all the existing fixed monthly obligations of a person. Typically, lending institutions prefer FOIR within 50% of the person’s monthly earnings to approve unsecured personal loans.
Reason 3: Low CIBIL score and poor credit history
CIBIL score is one reason which can significantly influence your lender’s decision to approve or reject an application. On the scale of 300 to 900, 750 is considered good enough to qualify for the credit. So, lenders may deny your application if the score is below 750.
Similarly, having a poor credit history can be another reason for the same. Late payments, defaulting on previous loans, missed credit card bill payments, etc. will put negative marks on your credit history.
However, if you have a good CIBIL score, not only will your application be approved, but you may also get to negotiate more affordable unsecured personal loan interest rates.
Reason 4: Not matching the eligibility criteria
Every lending organization has its unique set of criteria to be eligible for loans. The easiest way to assess this is by using a personal loan eligibility calculator. it helps to check your eligibility for a personal loan online in some easy steps.
If you do not match the unsecured personal loan eligibility requirements of your chosen lender, it may result in rejection. Hence, check out the conditions to qualify for a personal loan beforehand.
Prominent NBFCs in India such as Bajaj Finserv have minimum eligibility criteria –
-A residing Indian citizen
-Between 23 to 58 years of age
-Employed with an MNC, a private or public organization
-A minimum monthly income (varies according to cities)
Note that Bajaj Finserv also provides pre-approved offers for their existing clients. As the name suggests, these offers are pre-approved; hence, borrowers are already eligible for these schemes. Pre-approved offers are available for secured and unsecured advances including personal loans, business loans, mortgage loans, and other financial products and services.
The offers make the process easier and faster for customers to avail funds. Check out your pre-approved offer on an unsecured personal loan online by providing the basic information.
Reason 5: Applying for multiples loans
Applying for multiple loans can portray you as credit hungry. Whenever you apply for a loan, the lender approaches CIBIL to inquire about your credit rating history. Every such inquiry lowers your CIBIL score, increasing the chances of your loan rejection.
So, make sure to avoid these and learn how to apply for a personal loan appropriately so that you can avail the funds without any hassle.