Common
reasons Financial service providers reject
your loan application.
1.
Ineligible
for the loan
Your
loan application might be declined maybe due to the failure of meeting the required standards.
· No proof of income
· Requested amount is more than affordability
· Bad credit record
· Failure to submit supporting documents: ID copy, Proof of income, proof of address, three months bank statement.
2.
Loan
Mismatch
Personal loans have a limit. Therefore,
cannot be substituted for a business loan.
Both
loans have different interest rates and terms.
Personal
loans- personal (groceries, petrol, transport, mini vacations)
Business
loans- Business (start a business)
Educational
loans-Education (Educational purposes to pay at learning institutes)
Apply
for a loan according to your specific
need. It will save you from rejection, frustration and worst is high interests
rates.
3.
Wrong
information
If
your lender finds any of the information on your loan application document
inaccurate, your loan application will be rejected.
Details
as your name, address, ID number, or income are important for the lender to
approve your loan; any wrong information will lead to loan rejection.
·
Requesting of higher amounts than one can afford.
·
Incorrect work information.
·
Incorrect salary info
4.
Over
indebtedness
Overburdened
by debts such as loans, credit cards, defaults on previous or active loans. Cash
lending institutes will decline your loan application.
·
Judgements
·
Blacklisted
·
Bad credit record
5.
Affordability
Before
your loan application can be approved, credit providers or money lender will investigate
the three months bank statement to determine the amount of the loan’s
qualification. There are a lot of factors considered:
·
Monthly expenses
·
Monthly income
·
Existing loans
Ensure
loan required suits income received and month expenses.
6.
Low
credit score
Your
loan application may be declined if your credit score is too low. Credit score
plays a major role on the success of a personal loan. Low credit score equals
to high risk. There are several reasons of low credit score:
·
New in the credit world (new to the employment field/ income)
·
In arears
·
No clear credit track record.
·
Credit history
Every
lender has their credit scoring in-house method, and the consensus is that the
credit score range of 500-600 is considered low. You may find out your credit
score on www.transunion.co.za for a free
credit record
In conclusion,
it is important that you prepare all the required documents when applying for a
loan because they serve as confirmation of your ability to afford a loan. In addition,
always pay for your loans, if you cannot make payment on time, you must make payment
arrangements with your loan provide. This will ensure that in future your
credit record is up to standard and you can take a loan for any emergencies
that might occur. Take responsibility of your loan and use it wisely.
