Why Your Loan Might Get Rejected? What No One Warns You About

Introduction

Personal loans are a tool that helps you manage your finances. When you apply for an online personal loan, there come uninvited challenges you are not ready for. Don’t worry. Personal loans are not supposed to be a challenge, especially when you need money urgently.

Here are some common top challenges a borrower faces while applying for a personal loan online.

1. Application Rejection without Reasons

   Sometimes, lenders do not give you a reason for rejection, which may leave you confused and questioning what went wrong. It can be frustrating when you want money urgently but face the straight rejection that gives you no clue.

   What to do:

   1. Politely ask for the reason.

   2. Check your credit report to spot errors.

   3. Wait for a few months, work on your credit report and then apply again.

      
      

2. Lower Credit Score

   When your credit score is not good, you might face challenges getting your loan approved. A weak credit score that is below 650 points signals risk to the lenders. Lenders take it as a number that represents how trustworthy you are with their money. It can lead you to a straight application rejection.

   What to do:

   1. Use pre-approved tools online to avoid hard inquiries

   2. Keep your credit ratio low (Ideally below 30% of your total credit limit).
      

3. Higher Interest Rates

   Some lender charges extremely high interest rates to you. Especially when your credit profile is not a perfect fit for their loans. Also, it happens in cases when you apply for urgent monthly payments.

   What to do:

   1. Do compare multiple lenders before saying yes to the offer.

   2. Use online comparison websites to find the best loan for you.

   3. Do negotiate if you have a strong credit history.

      
      

4. Lack of a Stable Income Source

   When you do not have a stable income source or proof of income, the chances are that your application will face rejection. It usually happens with freelancers, gig workers and small business owners.

   What to do:

   1. Keep records of your income, tax filing, and bank statements updated.

   2. Consider applying to fintech lenders and NBFCs that consider self-employed borrowers.
      

5. Hidden Charges

   Some lenders use attractive lines like “zero processing fees,” “Lowest interest rates,” and many more, and later surprise you with hidden charges like late payment penalties, prepayment charges, insurance costs and other unknown fees.

   What to do:

   1. Before applying, read all the terms and conditions and the fine print carefully.

   2. Ask the lender to clarify the overall charges.

   3. Get clarity about prepayment and late payment penalties beforehand.
      

6. Too Many Loan Inquiries

   You might think it is good to have a backup plan if plan A fails and you decide to apply at one more lender. It might seem harmless at first. But remember, this mistake can damage your credit score and bring it down. Applying for multiple loans in a short period shows financial distress.

   What to do:

   1. Limit your loan applications. Choose 1-2 well-researched lenders.

   2. Give time between loan applications if the first gets rejected.

Conclusion

Applying for a loan is not that hard, but by following the important considerations, you can avoid these potholes coming into your way. A good forehand research is needed to get your loan approved successfully. Nowadays, there are digital loan providers who offer easy loan applications with just a few easy steps. It eases your job of application and also helps you get money within 24 hours.

Chinmay Quick Loan App is one of the top NBFCs of India, which allows you to receive funds within 15 minutes. Digital documentation and e-KYC speed up your journey to your first loan at Chinmay.

Apply for an Instant personal Loan online now. Get a Loan in just 15 Minutes.