You might be in the position to buy a new car/ house, start a business, or just want to take care of some personal debt. Whatever it is, have you ever wondered why your loan application gets rejected?
There are many reasons that a bank may reject an applicant. One of them would be a bad credit score. It can be hard to get approved for a loan when you have no credit history or a low credit score, but there are some options out there that can help you with your situation. The most important thing is that you need to find the right lender and apply within the right amount of time before your deadline.
Overall, this blog will discover the top 5 common reasons your loan application gets rejected and how to make your loan approved with no credit check!
Keep on reading.
Many people oftentimes don’t know the reason why their loan application gets rejected. But when we ask them, they just say the bank wouldn’t give them a loan – which is actually not true. Getting a loan is never an easy task, there are many hoops you have to jump through. For instance, you have to fill out tons of paperwork and if you don’t do it correctly, your application will definitely be rejected.
Below are the Top 5 Common Reason Your Loan Application Get Rejected
Reason 1: Insufficient Credit History/ Poor Credit Scores
The number one reason for loan application rejection is lenders need to be sure you are able to repay the loan so they want to know what level of risk they’re assuming by lending you money. If you do not have a credit score then it means there’s little chance of getting approved.
There is no one way that lenders can tell how much money someone can borrow but if someone has never borrowed before, then there’s less chance of being approved for a large sum of money than if someone has borrowed before with an established track record and good repayment history.
Reason 2: Error on Document
Secondly, your loan will be rejected when you fail to provide the necessary documentation. This can be anything from a typo on your credit card statement or an outdated invoice, to not having enough on-time payments in your history to cover the requested amount. It also could be late documents submitted, such as tax statements or bank statements, or not providing the required documentation at all.
Apart from that, if you’ve had an account with a financial institution before and you’re trying to open up another one with them but have bad credit or have been delinquent in paying off previous accounts with them, this will also cause rejection of your loan application.
Reason 3: Insufficient Income
Low income is also one of the leading causes of rejection. If you do not have sufficient income because you are losing your job unexpectedly then your application will be denied. This is because it does not seem like there is any chance that the lender will be able to get paid back.
In order to reduce the chances to be rejected by lenders, check your financial situation and do more research on applying for loans before applying so you better understand what information is needed by lenders like the minimum amount of the income.
Reason 4: Too Much Money
If your loan amount is too high, then it will cause the loan process to get rejected because you are deemed to have high debt. It’s very usual for people who have been in debt to avoid taking on more debt and rely on credit cards instead.
If you are already in a situation where you can’t afford your monthly living expenses and other debts, so you may not be able to afford the monthly payment of your new car or house. At the same time, your income is not sufficient to pay back all of that money at once, then you’re stuck with an option that’s even more expensive than what you originally had. It can become a vicious cycle.
Therefore, the best way to avoid these problems is by asking for only as much money as you need and can afford to repay each month instead of what you originally thought.
Reason 5: Low Repayment Capability
As well, banks do not want you to have any debt troubles in the future so they will always reject loans where the monthly repayments are too high for you to handle. If your income is barely enough to cover your monthly living expenses and another loan payment, then it’s time for you to reconsider getting a loan as you are going to struggle greatly into more money problems in the future such as debt or bankruptcy.
How To Get a Personal Loan With No Credit Check:
Online Lender
Many people don’t know that there are lenders who will give them a loan even if they have bad credit or no credit at all. This is a great way for someone who needs money right away but might not otherwise qualify for a loan because of his/her lack of good credit history, to get their hands on the money they need without delay.
You can go online and fill out an application that the lender will review directly. You just need a computer or smartphone for this. You’ll receive your application status within minutes if they approve of you being able to borrow money – so it’s a fast and easy process!
At Overcome Resources, the approval rate is as high as 98.5% !! We have served over 5,000 customers over these 20 years. We are able to approve your loan within 24 hours without any hidden charge/ deposit and no guarantor is needed. What you need to do is just take about 3 minutes to fill in the form on our website. Then, you are done with the application process.
Collateral (secured loans)
A collateral loan is a type of lending that does not require the borrower to have good credit. It is secured by an asset such as property that can be seized if the borrower doesn’t repay the loan. All you need is something valuable like your car or house and they will give it to you!
This means that if the borrower defaults on their payments, the lender has recourse to seize and sell these assets in order to recoup any outstanding debts. Unlike unsecured loans, lenders require a substantial amount of initial investment in order to provide funds for these types of loans because they have a higher risk of not being repaid.
Hence, this method does not require any verification or checking on your credit history and is a quick way for someone with no borrowing experience to get access to money.
Find a Co-signer
In order to get a personal loan with no credit check you’ll need a co-signer who has good credit and can act as the guarantor for your loan. The guarantor agrees to cover the unpaid balance if you are unable to pay it back on your own. They can be your friend or family member who is reliable and has a good credit score if possible.
On the other hand, the downside of this option is that it could put an unnecessary burden on them, and they could also be embarrassed by having their name associated with something like this.
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