Personal loans are a great way to get money quickly because they can be given out quickly, there are no rules about how the money can be used, and collateral is not needed. But when people apply for personal loans and are turned down, many lenders don’t tell them why.
Let’s look at some of the most common reasons why a borrower’s request for a SBI online loan is turned down, so you can try to avoid them as much as possible.
A poor credit history or none at all
Most lenders give priority to borrowers with good credit histories that show they are responsible with money and have a high ability to pay back loans. A bad credit history shows that the borrower has not been responsible for loans or credit cards in the past. This makes it more likely that the borrower will fail again in the future. Some actions, like paying bills late or skipping loan payments, can lead to a bad track record, which can then lead to a lower credit score and fetch you expensive SBI personal loan interest rates if the loan does not get rejected.
Also, people who want to borrow money but haven’t used loans or credit cards yet don’t have a credit history. Because they don’t have a credit history, some lenders may think it’s riskier to lend to these people. Because of this, many people who want to get a personal loan may not be approved, or they may have to pay higher SBI personal loan interest rates than people with more established credit histories.
Not meeting the requirements to be eligible as per the criterion
Each lender has its own set of rules about who can get credit and how much they can borrow, and what the range for Sbi personal loan interest rates will be. These rules can be very specific. There are certain requirements that would-be borrowers must meet before they can get a credit card or loan. Most of the time, these requirements include a minimum income and age, as well as other things like where you live, etc. Many people who apply for a personal loan are turned down in the first step, either because they don’t meet the basic requirements or because they live in an area that can’t be serviced.
Borrowers should use loan eligibility calculators before filling out their credit applications so that they don’t end up in the same frustrating situation after submitting their sbi online loan applications. Borrowers can use them to figure out if they are eligible for a loan or credit card of any kind. They are also free to use on many financial websites.
High ratio of EMI payments to income
Higher EMI to income ratio is the amount of a borrower’s income that is already going toward fixed monthly payments, like EMIs. The ratio of EMI to income can also be shown as a percentage. Most lenders prefer to lend money to people who have an EMI to income ratio of between 40 and 50 percent, which includes all of the obligations that come with the current loan application. If your monthly expenses are more than 40–50% of your monthly income, there is a good chance that the lender will not give you a personal loan or lend you at higher and more expensive Sbi personal loan interest rates.
Job history isn’t stable
Many lenders don’t want to give loans to people who have changed jobs a lot in the past. Even though borrowers choose to change jobs often in order to improve their careers and make more money, lenders see this as a sign that the borrower’s career path is uncertain. Because of this, most lenders see these types of borrowers as less creditworthy, especially when it comes to unsecured loans and loans with medium- to long-term terms, like mortgages or car loans, which require a higher level of commitment from the borrower. For example, a lender can tell a borrower that in order to get a sbi online loan, the borrower must have worked for the same company for the past three years. Because of this, a lot of people who apply for personal loans and have a history of changing jobs often have their requests denied.
Credit report mistakes
If there are mistakes on your credit report, it might hurt your chances of getting a personal loan. Incorrect reporting of payments closed accounts that still show as open, and other problems could fall into this category. A lot of people are denied personal loans because their credit reports have mistakes that they didn’t notice. This kind of wrong information could also be a sign of identity theft or fraud. It is recommended that you check and look over your credit report often so that you can find any problems quickly and fix them before they hurt your chances of getting a sbi online loan. This will help you avoid being turned down in the same way.
Inadequate documentation
This is another common reason a borrower is turned down for a personal loan, and it’s also one of the most common. Documentation must be complete and correct for a loan application to be processed and approved. During the loan application process, if you don’t bring the right paperwork, your loan request will definitely be turned down. Before you send your application to the chosen lender, you need to make sure you have all of the documents that the lender needs. Having the right paperwork not only makes the process easier but also makes it more likely that your loan application will be approved.
Final words
Last but not least, remember that the eligibility criterion for a personal loan would vary from lender to lender, and so do the reasons for rejection. There is no one hard and fast rule. And with lots of lenders, including banks, fintech and NBFCs offering personal loans nowadays, it’s best to enquire with multiple lenders and then finalize where to apply for.