Are you feeling the pinch of financial stress, longing for a personal loan to alleviate the pressure, yet haunted by the fear of rejection? It’s a scenario many can empathise with. But fear not; understanding why lenders may reject your application is the first step toward securing that much-needed financial assistance. So, let’s delve into the five common reasons why personal loan applications hit a roadblock with banks. But before we embark on that journey, let’s take a moment to grasp the essence of personal loans.

Understanding Personal Loan

A personal loan is money you can borrow without needing collateral, based on your income and ability to repay. It can be used for various purposes like vacations, consolidating debt, or handling unexpected costs

Benefits of Personal Loans

Personal loans offer convenient access to funds with flexible repayment terms. The simple application process and minimal documentation requirements make obtaining a personal loan straightforward. Additionally, lenders prioritise quick approval and disbursement, ensuring timely financial assistance.

Exploring the Causes Behind Bank Rejections of Personal Loan Applications

Before delving into the reasons for personal loan rejections, it’s crucial to grasp the factors lenders weigh when assessing applications. While banks may offer instant personal loans, understanding why applications get rejected is paramount. Here are common reasons your personal loan request might be declined.

Insufficient Income: If your income is not deemed sufficient to comfortably repay the loan amount requested, banks may reject your application. They assess your income to ensure you can meet the monthly repayment obligations.

Poor Credit History: Banks assess your credit history to determine your creditworthiness. A poor credit history, characterized by missed payments, defaults, or bankruptcies, may lead to rejection as it indicates a higher risk for the lender.

High Debt-to-Income Ratio: Your debt-to-income ratio measures how much of your income goes towards debt repayment. If this ratio is too high, indicating that you’re already heavily indebted, banks may hesitate to extend further credit, fearing you may struggle with additional loan repayments.

Lack of Collateral: Personal loans are typically unsecured, meaning they don’t require collateral. However, if you’re applying for a secured personal loan and lack sufficient assets to pledge as collateral, banks may reject your application due to the higher risk associated with unsecured lending.

Incomplete or Inaccurate Application Information: Providing incomplete or inaccurate information on your application can raise red flags for banks. They rely on the information you provide to assess your creditworthiness and repayment capacity. Any discrepancies or missing details can lead to rejection.

Understanding these reasons can help applicants address potential issues before applying, increasing their chances of approval

Also Read: Understanding the EMI of a ₹2 lakh Personal Loan: A Comprehensive Guide

How to apply for a Personal Loan

If you are planning to apply for a personal loan online, simply visit the IndusInd website and fill out the required details, including your PAN Number, Mobile Number, Email ID, and current PIN code. Additionally, ensure you have the following documents ready:

• PAN Card
• Proof of residence such as Aadhar Card, Passport, or driving license in case your current address is different than your permanent address

Make sure you meet the eligibility criteria listed below:

• Applicant must meet the personal loan eligibility requirement of being at least 21 years old.
  • Maximum age at personal loan maturity should be 60 years or retirement age whichever is earlier.
• Applicant must be an Indian citizen or resident
  • Minimum net monthly income should be Rs.25000 for personal loan online application
  • Should have completed minimum 2 years in employment and minimum 1 year in the current organisation.

Conclusion

In conclusion, understanding the common reasons for personal loan rejections empowers applicants to address potential issues, increasing their approval chances. Consider instant personal loans from IndusInd Bank for convenience and ease of access to personal loan solutions. Click here to learn more about things you must keep in mind before applying for a personal loan online.

Apply for a personal loan with IndusInd Bank today!

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.

Imagine Sarah, a single mother, suddenly faced with unexpected medical bills for her child’s treatment. She urgently needs funds but finds it challenging to understand the eligibility criteria for a Personal Loan, given her limited income and average credit score.

To help Sarah and others like her, this blog provides essential details about Personal Loans. By understanding the process and seeking guidance from financial advisors, individuals can navigate the requirements and secure the funds they need for emergencies like medical expenses. Through clear information and proactive steps, borrowers can overcome hurdles associated with eligibility criteria and access the necessary financial support.

Let’s delve into the prerequisites for checking personal loan eligibility. Discover what criteria you need to be eligible to be able to secure financial assistance.

Eligibility Criteria for Personal Loan

As mentioned earlier, personal loan eligibility varies depending on the lending institution. Here’s a breakdown of the standard criteria typically assessed by every lender before approving Personal Loan requests.

Age: Lenders consider the age of the borrower as it reflects their ability to earn and repay the loan. Generally, individuals between 21 and 60 years are preferred as they are perceived to have a stable income. However, some lenders may extend loans to senior citizens with certain conditions.

Annual Income: Personal loan salary eligibility also holds significant importance. The borrower’s annual income is a significant factor in determining their loan eligibility. Lenders typically require a minimum monthly income, often around ₹25,000, to ensure the borrower can comfortably repay the loan.

Credit Score: A borrower’s credit score is a measure of their creditworthiness. A higher credit score, typically 750 or above, indicates a better likelihood of loan approval. Factors such as income, loan repayment history, and credit utilisation ratio contribute to the credit score.

Credit History/Debt: The borrower’s past credit history and existing debts impact their eligibility. A history of timely repayments improves creditworthiness, while excessive debts may raise concerns for lenders.

City of Residence: The location where the borrower resides affects their eligibility due to differences in living expenses between cities. Lenders may have varying criteria based on whether the borrower resides in a metropolitan or Tier II/III city.

Employer/Organization: The borrower’s employer or organisation plays a role in assessing their eligibility. Working for a reputable and established company enhances the borrower’s credibility, increasing the likelihood of loan approval compared to employment with a startup or less-known organisation.

Ensure that you fulfil the aforementioned requirements, as they are crucial for assessing your eligibility for a Personal Loan. Conducting a thorough personal loan eligibility check is essential before proceeding with your application.

Also Read: Personal Loan Interest Rates and Charges – IndusInd Bank

How to check your Personal Loan Eligibility

Obtaining a Personal Loan is a straightforward process. Simply visit IndusInd Bank with the necessary documents and apply in person. Alternatively, you can apply online by clicking here, and completing a simple application form. You can also calculate personal loan eligibility by using a Personal loan calculator.

A personal loan calculator is a tool used to estimate monthly payments and total repayment amounts for a personal loan. Click here to check the calculator.

Here’s a list of documents typically needed for a Personal Loan application:

Documents for Salaried Employees

Generally, banks require the below-mentioned documents to apply for a Personal Loan.

• Application: Application form with photograph
• Proof of Identity: Self-attested photocopy of any one of the following:
  • Driving license
  • Passport
  • Voters ID
  • Aadhaar
  • PAN
• KYC: Valid identity/Residence/Signature proof
• Income proof:
  • Form 16/ITR for the last 3 years
  • Latest 3 months salary slip
• Banking: Latest 3 months’ Salary Credit Bank Statement

However, new-age banks like IndusInd Bank do not require any physical documentation. The application process is 100% digital with no income-proof requirement. This simplifies the entire personal loan application process and makes the disbursal process quick and efficient.

Also Read: Using an Instant Personal Loan to Fund Your Dream Wedding: The Dos and Don’ts

To Conclude

Before applying for a Personal Loan from any lending institution, it’s crucial to verify your eligibility. A rejected application can negatively affect your credit score. If you believe you don’t meet the minimum eligibility requirements for a Personal Loan, it’s advisable to wait and enhance your eligibility before proceeding with the application.

IndusInd provides Personal Loans with straightforward eligibility requirements and no physical paperwork. With us, you can explore Personal Loan options tailored to various needs, including Education, Medical Expenses, and Travel.

Apply for a personal loan with IndusInd Bank today!

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.