One of the biggest fears people have while applying for personal loans is that what they will do if their application is rejected. Though there is not much that you can do after rejection, you can pay attention to following factors before you apply for the loan:
Insufficient Income for EMI – Income plays a major role in influencing the lenders’ final decision. If your monthly income is large enough to allow comfortable repayment of EMIs then your application will not be rejected. But if you income is not sufficient, then you might face rejection. Lenders want to make sure that they lend to those who can repay back the loans. So if your EMI is equal to more than 40% of your net monthly salary, your application will be rejected due to insufficient income.
Bad Repayment Record (Poor Credit History) – if you have been irregular in paying your loan EMIs in past, then that means that you have a poor credit record. Before lending, all lenders verify borrower’s credit history. If the credit score is poor, then it will be a big reason for rejection of your application
Serial Borrower – If you have been borrowing a lot in recent past, then some lenders might not be willing to lend you any more money. But such a rejection reason is limited to few lenders only. Most lenders will lend if you have good income, good repayment history and existing EMIs that are less than 40% of your take-home pay.
Incorrect Information – Before lending, all lenders verify the information provided in loan applications directly as well as through indirect channels. If any wrong information is found, then lenders have the option of rejecting the application.
So if you have still not applied for the personal loan, then make sure that you have objectively assessed yourself on these factors. You don’t want to be surprised negatively if your application is rejected in future.