When you plan on availing a loan, you do your research to get the best possible lending option available in the financial market. Comparing multiple lenders and what they have to offer in terms of the loan will give you an idea whether it is the right kind of lending for you. Numerous banks and lending institutions offer a reasonable rate of interest for personal loans. So, you do not have to pay high-interest rates on loan. When choosing the lender, make sure to compare the rates and options offered in the market and opt for the one that works for you. Generally, a reasonable interest rate on loan is one that’s lower than the national average rate, which is 9.41% p.a. Your credit score, debt-to-income ratio and other factors all determine the interest rate for personal loan.
To get low-interest rates on loan, you need to make sure you have a good credit score, less financial liabilities, higher income and no default record in your credit history. However, there are times when loan application might get rejected for some other reasons. Apart from the eligibility criteria of the loan we tend to miss little details when submitting the loan application, that might lead to rejection of your loan.
There are specific personal loan eligibility criteria that need to be fulfilled to avail a loan. They are as follows:
- To apply for a personal loan the applicant should be between the ages of 23 to 55 years
- If you are an Indian resident you are eligible for a personal loan
- You should be an employed at an MNC, private or a public limited company
The documents required to get a personal loan are as follows-
- KYC documents such as PAN, Aadhaar Card, Driving license, Voter’s ID, Passport
- Bank Statements for the last three months
- Salary slip of the previous two months
- Passport-size Photographs
Unexpected Reasons for Personal Loan Rejection
- Credit Report Errors
Your credit report contains all the financial information of an individual’s past loan repayments and credit cards. Lenders consider your past behaviour along with your present activity to determine your loan repayment intent in the future. Your credit score is an important factor considered by the lenders when availing a personal loan. The lenders make the final decision of granting the loan based on your score. If your credit score is low then there are higher chances of getting your loan application rejected or you may be charged with a high-interest rate on loan. With a good credit score, the lender gets convinced that you will be able to repay the loan on time.
- A signature mismatch can lead to rejection
When you submit the loan documents and application form you need to make sure your signature is the same everywhere. Though it is quite understandable that you are supposed to provide your signature on many forms and documents. There are chances of making a different signature compared to the documents. Hence, you need to make sure the signature is correct to avoid mismatch that may lead to rejection of your loan.
- Absence of NOC (No Objection Certificate)
If you have already closed your previous loan and are planning to get another loan you need to get a NOC from your previous lender. Without a NOC your loan application will get rejected. When you get this certificate it gets reflected in your CIBIL report. If the lenders check your credit history and don’t find a NOC of your previous loan, your application might get rejected. So, make sure to get it from your previous lender before you apply for a new loan.
- Bank’s Loan Default List
If you want to avail a loan and you live in a location or area that falls under a negative zone or falls under the bank’s defaulter list, there are high chances of getting your loan application rejected. Banks and financial institutions have their own record of address, location and other details and if your current location is under the defaulter list or a negative zone there are higher chances of loan rejection.
- Inaccurate information
Since a personal loan is an unsecured type of loan every detail mentioned of a borrower is verified for authenticity. If the lender finds any inaccurate information mentioned in the application form the loan gets rejected. Hence, it is essential to carefully provide accurate information and read the filled up form before submitting it.