With the continued rising cost of living, many people are growing desperate in need for money to help meet their expenses. As a result, many of them are turning to banks for personal loans.
The loan application process is tedious and not all applications are approve. This may be due to the following reasons.
Credit Record
Your credit record is one significant deciding factor in the approval of your loan application. If you have accumulated credit card dues or have delayed in the payment of previous loans the bank would have a reason to reject your loan.
Job Stability
Banks evaluate your ability to pay back the loan without any default and your job stability is a prime concern for most banks. Having frequently changed jobs may imply instability and could be a reason for rejection.
Some banks expect one to have been employed with a particular company for a certain duration of time before they are eligible for a loan though the period may vary depending on the bank. Having stayed longer with a given company would be taken as an indication that you are able to meet your monthly commitments.
Switching jobs would be more ideal after the loan has been approved though it is important to notify the bank of the switch. In case you are obligated to change jobs during the loan application process then it would be advisable to notify the bank prior to the move since, as a formality, 24 hours before the approval of the loan your bank will contact the initially indicated employer. Withholding such information would be regarded as fraudster.
It is though important to note that notifying the lender that you have changed jobs might cause a delay or even derail the entire loan application.
Your Salary
The amount you earn in reference to the amount you are borrowing would to a great extent determine if the loan will be approved. For instance if you earn KSh 20,000 and are applying for KSh 1 million, there would be a high probability that the application would be rejected. This is because the loan will cause a severe strain on your income or make it unlikely for you to be able to effectively pay.
It is also important to not that if you are juggling too many loans already, then your income minus the ongoing credit repayments is what will be considered as your real income.
Guarantor
If you were a guarantor to someone else’s loan and they failed to pay up then you would be accountable to the loan. If you were unable to repay the loan then it would reflect negatively on your credibility and will subsequently lead to the rejection of your application.
If your loan has been rejected in the past It is not wise to keep reapplying without any rhyme or reason. Any rejected loan application will be recorded by the bank and each time you apply the previously rejected applications will show up on the bank’s data base and this could pose a problem since it will bring to question your ability to repay.
It is important to note that in case your loan is rejected, take time to identify the reason as to why that was the case before you reapply.
All the best in your loan application