5 Reasons Why You Can Get Refused a Loan
There is no guarantee that once you apply for a loan you would be approved to obtain the amount. Many loan applications are turned down by lenders. This has been more evident recently as banks have become stricter when it comes to processing and approving loans. No one could blame the lenders because it is their prerogative to approve or disapprove any lending application.
Are you planning to soon apply for a loan? Your first step should be to find ideal loan providers and appropriate lending products that may suit your current financial condition. Second, you should prepare all necessary requirements. Third, you should understand how loan applications are processed. In this regard, you should know the top five reasons for loan disapprovals.
1. Your credit scores may be low. Always remember that loan providers always check out credit history of loan applicants. This is a necessary measure to make sure lenders are not taking too much risk on lending you money. Of course, if your credit record is good, lenders could easily consider your application. Otherwise, you may have to find other lending options or products, especially those for people with bad credit.
2. The loan application form may have inaccuracies. Loan providers are strict when it comes to information you disclose on your loan application form. If there is any incorrect information in your address, birth date, or references, loan providers would easily be on the guard. If lenders could not trust you about such small details, how could they entrust to you a huge amount of money?
3. You are currently in a debt management program or plan. Again, lenders would surely find out about such information even if you intentionally do not disclose it. No lender would easily consider your loan application if you are in such a program. That is quite logical. Lenders would surely doubt about your ability to take in another loan especially now that you may be having a hard time managing your current debts and finances.
4. Your collateral or loan security may not be valuable to the loan provider. Secured loans are always more recommended than unsecured ones. Secured facilities usually come with lower interest rates and higher loan amounts. However, lenders could be stricter when evaluating properties or assets that you surrender as loan security. They would always make sure that once you default on your loan, the properties could be liquidated to generate more than the amount you borrowed.
5. Your guarantor may not be qualified to co-own your loan. It could also be that the guarantor currently co-owns another huge loan. Most loan providers believe that it is just unfair and improper to burden any party or individual with multiple loans.
Are you ready to file a loan application? These should serve as your guide so you could ensure approval. Also be reminded that loan providers also consider loan amounts significantly. Small loans could possibly be approved instantly if you have submitted all requirements. Huge loans might take some time to get approval as lenders need to first deliberate your application and credit standing.