6 Reasons Banks Denied Your Personal Loan Application

If you’ve ever been denied or rejected for whatever reason, you can relate to the unpleasant feeling of having to accept that you aren’t good enough. This applies to any situation, be it personal or even professional, which delivers a bad blow to your self-esteem as you question your capabilities. One of the most common is the one you experience from banks when you apply for a loan. This delivers a similarly hard blow since it hurts your finances, particularly if you’re in dire need of cash.

If you find yourself having a hard time dealing with this, the only way to accept it and perhaps even avoid future rejection is by knowing what went wrong. This will help you understand the whole application process and eventually meet all the requirements needed to be approved of a loan, specifically a personal loan.  

Here are the common reasons why banks deny loan applications that you can consider the next time you ask for a personal loan.


  • Your loan amount is too high


You will have to fill out a form when you apply for a personal loan, and one of the fields will ask you to state the ‘desired loan amount.’ One of the reasons why your application could get rejected is when you’ve provided an amount that’s too high relative to what you can afford to pay back.

If this is what gets you each time you apply, better avoid this mistake. To make sure you won’t be going over, try using an online loan calculator. This can check how much you can borrow based on your current income.


  • You have an unstable employment record


It’s important to note that the bank considers your ability to pay them back. So if you have an unstable job, you are not likely to be approved. The bank needs to be assured that you will be able to sustain the loan payments throughout the entire loan term.

What lenders require is a specific minimum tenure of employment or length of service. This information is indicated on your certificate of employment that you must submit as a requirement.


  • Your income is not enough to pay off the loan


Nobody is going to be willing to lend money if they know you won’t be able to pay it back, more so with banks. This is why they require loan applicants to go through a strict process to make sure they won’t have trouble paying off their loan.

It doesn’t matter how much money you have in the bank. You won’t be approved for a personal loan if your income can’t sustain the monthly payments. Banks have a minimum annual or monthly income requirement, which is higher for self-employed borrowers compared to employees earning a monthly salary.

You will need to include proof of income in the submission of documentary requirements, and banks determine your ability to pay through a certificate of employment. This document states your monthly income, which is the basis of your ability to settle a loan.


  • You have a bad credit score


Borrowers with high salaries and stable jobs are sometimes left in shock when banks decline their application. What they don’t realize is that there are other factors at play apart from their income and job tenure.

Banks conduct a credit investigation on an applicant. This is the part where they try to find out if you have a good credit standing since this is critical to a successful loan application.

Banks also look at your credit history and score to know if you’re worth lending money to. Both credit history and score reflect your behavior as a borrower, including maxed out credit cards and loan defaults, which happens when you haven’t been paying off a loan for a long time.


  • Your application details are inconsistent or incomplete


It’s important to note that a simple mistake on your application form can blow your chances of getting an approval. Lenders need to verify both the completeness and consistency of both personal and financial information you write down. If these aren’t verifiable, it can be a cause for delays or even rejection.

It is imperative that you double check each detail you write down on your application form and be ready for a call from the bank when they verify all these data to lessen the odds of being denied.


  • You don’t meet the eligibility requirements


There are some lenders that have specific and, at times, unique requirements when accepting personal loans. You will still have to comply, so you can be eligible for the loan you are applying for. If a bank needs you to have a credit card with them for at least six months before being eligible, you will need to have one, or don’t even bother.

Banks don’t make it easy for us to apply for a loan, and with good reason. It’s also not easy for them to let go of money, so you have to go through the whole application process and make sure to avoid these mistakes. But if you need to avail of a personal loan with a relatively simpler application process, you can try with Cashalo. Cashalo only requires you to upload one (1) valid I.D. to apply for its Cashaquick loan. Upon approval, you can get your cash in as fast as 30 minutes! It’s your best bet if you need quick cash without having to jump through hoops.