Personal Loan Rejection Reasons - Personal Loan Blog - Tata Capital

Personal Loan Rejection Reasons

Feb 28, 2017

Personal loans have been quite helpful for those, who have found themselves in situations where they had no other way to arrange funds. But how would you feel when you are in need of money, you apply for a personal loan and it is rejected?

Well, none of us like rejection.

In case of personal loans, the loan applications are rejected for various reasons. Lets try and understand these in details, so that you can take necessary precautions when applying for the same.

Insufficient Income: This is one of the biggest reason for rejection. Lenders want to lend to those who can comfortably pay back their money with interest. So your income plays a major role in influencing lenders' decision. If your income is large enough to allow monthly EMIs and there is stability in your income (job), your application will not be rejected. But suppose your income is Rs 25,000 and your EMI for loan comes out to be Rs 20,000, then the lender will reject your application. Also, if you are already paying EMIs on another loans, then your income will be reduced by these EMIs, to be considered for personal loan eligibility.

Poor Credit History: No one wants to lend to someone who has a bad record of loan repayment. Skipping EMIs, defaulting on loans, late payment of bills, are all indications of bad credit track record and reflect on your credit ratings. Before lending any amount, lenders first verify your credit history. So a poor credit history can result in rejection of loan too.

Too much loan too soon: If you have availed too much loan in last one year, some lenders might not be willing to lend you more. Such policy depends on lenders and can vary from one to another.

Older Rejected Loan Applications: If your loan application was rejected in past, then it will reflect in your credit history. Many times, this results in loan application getting rejected again, unless there is a significant improvement in credit score and repayment history since last rejection.

Wrong Details: Lenders verify all information provided in loan applications. If any discrepancy is found, lenders will have good reasons to reject your application.

These are some of the major reasons for rejection of personal loans. So make sure that you have all these covered when you decide to apply for a loan.