As we all know, Personal Loan is an unsecured loan which is use to meet an individual’s requirement. If you opt for Personal Loan, you don’t have to keep any mortgage with the bank. Personal Loan is not need specific. That means, you can take the loan and can use it for a variety of reasons. Some of them are- any medical emergency, vacation with family and friends, consolidation of debt, child’s education, buying any electronic gadget, home renovation etc.
Personal Loan involves attractive interest rates, minimum documentation and easy loan approval process. For the Loan approval you need to check the following parameters-
- Minimum and Maximum age bracket
- Net take home salary
- Credit history or CIBIL Score
- Any existing debt
- Company profile
- Complete documents
- Residential location
If any one of them does not satisfy to the norms of the lending institution, your loan will be rejected.
Following are the reasons for your personal loan rejection-
- Age bracket- The lending financial institution sets a benchmark for the age limit to be eligible for personal loan. This age limit is set, so that the bank is assured that, you can repay your loan without any difficulty. The minimum age limit is 21 years and maximum age limit is 60 years ( at the time of repayment). If the applicant does not match the age limit criteria, his loan will get rejected.
- Net take home salary– A steady source of income is required to maintain to be able to repay the loan. Different banking institution sets different income limit for the applicant. But in general, the minimum net take home salary of the applicant is Rs. 20000. If your income is below the mentioned income level, then your loan will get rejected.
- Credit history or CIBIL Score- A credit score is generated by credit bureaus based on your credit behaviour. Credit score measures the applicant’s creditworthiness and his repaying behaviour. The credit score is reflected in his CIBIL score. If you have a CIBIL score of 750 or more, then it is considered favourable for loan approval. If the CIBIL score is less than 750, then the repaying capacity of the applicant is questioned and is not considered favorable. So, for that your loan approval is rejected.
- Any existing debt- If you have an existing loan or credit card payment, the lending institution review the debt to income ratio. The debt to income ratio depicts the ratio of how much you earn each month to how much you spend on your debt payment, assuming minimum payments. If the ratio is 40%-50% of your income to repay your debt, you will be a high-risk borrower. Your repayment ability will be questiones and your loan will be rejected.
- Occupation- Personal Loan is valid only for salaried individuals ant for any business professional. Those individuals are eligible to get loan if they are professionals like-Doctors, CA, or they work in central or state bodies, private limited companies or any private sector. Apart from that, other individuals are not eligible and their loan will be rejected by the bank.
- Company profile- It is always appreciated and taken into account, if the applicant’s company profile is standard or above-average. Super Category Company or CAT A Company employers are likely get an easy loan. But if you working for CAT C Company, then other eligibility criteria should be achieved or your loan will get rejected.
- Job Stability- Stability in your job is a very important criteria for loan approval Generally, banks don’t prefer applicants who has a history of continuous job change. Though maybe, applicant changes his job frequently in search of better job and more salary, but the bank considers it as less of creditworthy. To get personal loan, you need to work in their present company for a minimum of 3 years, or your loan will get rejected.
- Complete documents- A vital part of loan approval is submission of complete documents. The documents which you need to surely submit to the lending institution are- ID proof, Address proof, Bank Documents, Income proof. So, if you fail to submit any one of them, your loan will get rejected by the bank.
- Residential location- If your residential location has a high defaulter risk, then there is a high chance of getting your loan rejected. It may be the situation that, all your eligibility criterias are matched according to the norms of the lending institution. But your residential location has the reputation of high defaulter risk, then your loan will get rejected.
- Too much enquiries and applications– Each time, when you apply for a credit card or a personal loan, bank inquires credit report, which is considered as hard enquiry. Each hard enquiry lowers the credit score. Too many loan applications and credit enquiry indirectly gives an idea that you are a credit hungry and might turn a high risky candidate. So, your loan might get rejected.