How To Avoid Being Rejected For A Loan Application
Tuesday, December 19th, 2017
For those times in life when a personal loan is exactly what you need to forge a path towards a bigger financial goal, making sure you handle the application process with flying colours is important.
To help you get your personal loan application across the line, it helps to understand the things you can do to help avoid the rejection pile.
What Are The Main Reasons Why Personal Loans Are Not Approved?
- Your credit history is bad: Although the term ‘bad credit’ is used generally, the truth is that there are different levels of bad credit. For example, although you don’t have any defaults listed in your credit history, you may have a record of applying for numerous loans – and loan applications all affect your credit score (even when you are the one who decided to not go ahead with the application).
- Insufficient income: If the lender investigating your loan application determines that your income level is not enough to comfortably meet your loan repayments, your application will get rejected. Different lenders often have different criteria around minimum income levels – another great reason to use a loan broker who understands the guidelines of multiple lenders and can guide you in the right direction to spare you the disappointment.
- The purpose of the loan: Even if you have an exceptional credit rating and your income is enough to meet the repayments without stress, your loan application could still be rejected if the lender has restrictions around the things they will (and will not) lend money to support. For example, a secured loan may only be secured by specific assets. When it comes to car loans, for example, there is often an age restriction on the vehicle your plan to purchase. If your lender believes the reason for your loan application is not credible, your chances of being rejected are quite high.
- Incorrect information: If lenders find inconsistencies in your loan application details, they may reject you. Be sure to fill in all forms correctly, with information that is supported by other documents and identification. And be honest about any commitments and realistic about your living expenses.
- Unstable employment history: Believing that you have the ability to repay the debt is critical for a lender to understand. Depending on the nature of your work, and the criteria of the lender you are applying to, you can run the risk of being rejected if your employment history appears unstable and without regular or consistent income.
- You have a lot of existing loans/credit: Having too many credit cards or other loans – whether they include business loans, personal loans, mortgages or other finance – can all impact your ability to be approved for a loan application. Talk to a professional loan specialist for the right advice on when you are ready to apply for finance and what lenders might suit your individual circumstances best.
- Secured assets with low value: With many lenders enforcing restrictions on the type of asset able to be used as loan collateral, your loan may be rejected if the value of your secured assets are too low.
To ensure your loan application is approved, talk to an experienced loan specialist at Loans Actually on 03 8805 1850 for the right advice on how to apply for a loan without being rejected.