Personal loans are generally ad hoc credit provisions from financial institutions when in dire need of money for a variety of expenses. They are often short term loans, which provide immediate respite in times of need. They require no collateral; all you have to do to get a personal loan is get approved by the institution and you’re good to go!
Although sometimes, personal loans may get rejected due to a variety of reasons which can cause distress for the loan applicant. EarlySalary brings you some of the reasons why this may happen, so we can always stay one step ahead.
#1 Stringent Loan Requirements
The approval of personal loans often depends upon your credit history, job profile, current financial situations, employment history amongst others. In some cases, it can also depend upon the city you are living in or if you’re of the right age. Manoeuvring through these conditions is a hassle and people often get stuck in one clause or the other. The requirements should therefore be read correctly and thoroughly before submitting your application. Personal loan apps like EarlySalary require only basic documents to be uploaded for the loan to be approved within minutes. For approved users, the disbursal is often instant.
#2 Poor Credit History
Approval of a personal loan also depends upon the credit score of the borrower. In fact, it is one of the crucial factors for your loan approval.The score provides an assessment of your likeliness of paying back the loan amount. Credit scores are measured by agencies such as CIBIL, based on your credit repayment history. A score above 750 is considered to be a good score with almost no chances of rejection. Online personal loan apps such as EarlySalary, however, adopt a broader approach to borrower assessment, and do not rely primarily on the credit score. The personal loan interest rates by these platforms can be as low as Rs. 9 per day on an amount of up to Rs 2 lakhs.
#3 Frequent Job Changes
Creditors look for stability when a person applies for a loan. Frequent job changes often translate to instability in the eyes of the lender. Switching your job multiple times in the past can therefore reflect negatively when being asses for a loan. Some financial institutions may require staying at the same job for a number of years. Therefore, having a stable job with a steady income can only increase the chance of loan approval.
#4 Other Eligibility Criteria
There can often be other binding criteria to become eligible for a personal loan, apart from a steady income and proper documentation. These conditions are often set by the lender and have to be complied with. These can range from being the right age or being in the same city in which the lender operates. These factors are often not in control of the person, but with a virtual loan platform like EarlySalary that offers instant personal loans online, there is no need to be in any specific city in the country. You can get your quick personal loan approved within minutes via the EarlySalary app, which has been downloaded more than 8 million times.
#5 Prior Rejection Of Applications
Though obtaining a personal loan is a relatively easy process, frequent borrowing can be a red flag for many lenders as well. This is because the more you borrow, the more are the chances of defaulting which affects the credit score. And since a low credit score is undesirable, it may lead to your future applications being rejected.
All these factors can be avoided by careful reading and understanding of the terms and conditions of the lender. A successful application for a personal loan online enables a person to wriggle out of an undesirable situation, and for that to happen, keeping in mind the above-mentioned reasons can help you get the loan approval you need.