The personal loan app makes it very easy to submit an application for a short-term loan. These apps have speedier approval times than conventional bank loans. It’s difficult to obtain a personal loan, so if you’re looking for one, you may have done extensive research to locate a lender that would give you the finest terms.
There are a few things that can go wrong despite how simple and quick it is. Even if the personal loan application authorises the loan the same day, there may be a basis for their rejection. You might need to submit a new application if your personal loan is denied.
Reasons Your Instant Cash Loan Might Be Rejected
1. Low Credit Score
Your credit score is a reflection of your dependability and creditworthiness. To be eligible for any form of loan, you must have a strong credit score. It will be more difficult for you to get a loan the lower your credit score is. Your credit score is lowered by elements including a bad repayment history, an excessive number of hard checks, and missed EMIs.
A credit score below 500 raises concerns for the lender, who could be hesitant to grant your loan. Even if your loan is approved, the lender will charge you a high interest rate to cover the risk of you defaulting on the loan.
2. Income and Debt
While it’s great to keep your credit score high, lenders also take your yearly income and existing debt into account when approving a loan application. This enables them to assess your ability to repay the sum you want from them. There is a potential that your loan application may be denied if your yearly income is low and the lenders believe you won’t be able to repay the requested amount. Pay off your debts if you have any to lessen the likelihood of this happening.
3. No reliable Source of Income
Being a salaried worker is one of the prerequisites for the personal loan application. The personal loan application will reject your loan request if you don’t have a steady source of income. Avoid asking for a fast loan if you are unemployed or between jobs. If you have a second source of income, such as rental income or investments with monthly returns, that might be helpful. Additionally, the business you work for should be registered. You must have worked for the same company for the previous three to six months in order to submit your pay stub.
4. High Credit Utilization
It is termed excessive credit utilisation if you use your credit card to make purchases that are greater than 30% of the entire credit limit. Loan approval rates are higher for applicants with credit utilisation rates under 30%. One of the factors that might cause your loan application to be denied is having a high credit usage rate. In order to maintain a high credit score and reduce your debt load, it is best to keep your credit utilisation rate below the specified percentage.
5. Residential Stability
Typically, the papers you provide for KYC take care of your residential stability by providing banks with the evidence that you have a permanent residence, which proves your presence in the city. If you rent your home, banks may want additional information from you. If the banks are unable to verify your residential stability, they will likely reject your loan application.
6. Lack of Documents
Consider applying for a loan at a bank. You would wait in long lines and over lunch breaks, walk from counter to counter, and then submit your application with the required paperwork. A few days later, when you assumed your loan must have been authorised, the bank notifies you that your loan has been denied owing to inadequate documentation. Do you already feel frustrated?
The most frequent reason for loan denial is incomplete documentation. When you need money, they add to your issues by causing needless delays and denials. Even if you apply for an immediate cash loan online, where there is less paperwork, your loan application will be denied if necessary information, such as IDs and pay stubs, is absent.
7. Not qualified based on other Criteria
In addition to providing the required documentation and income information, one must meet other requirements outlined in the personal loan application. To be eligible for the fast loan, you must fall within the age range. One needs to dwell in India. Additionally, you need to confirm if the loan application offers personal loans online in your city. In most Indian cities, lending apps provide personal loans. As per the guidelines outlined in the loan application, make sure you have the green light.
8. Inconsistency in Signature
Many individuals struggle with getting a flawless signature, and by the standards, it ought to be the same everywhere. Now, getting a loan isn’t that simple, and when you sign a loan application incorrectly, it gets refused. If you want your loan application to be approved, you must endeavour to produce the perfect signature that matches your other paperwork.
9. Inaccurate Information
When you give the lender false information, your loan application may also be denied. Since every data you submit is rigorously checked for legitimacy, if lenders discover a mistake, they will reject your loan application.
10. Several Hard Inquiries
Although it is natural to feel hopeless when you need money right away, applying to several lenders will just reduce your chances of getting a quick cash loan. Lenders run a hard credit check, and having a lot of hard inquiries in a short amount of time can really affect your credit.