Life is full of surprises and money plays a vital role in these surprises. Without money, nothing is accessible. But sometimes it becomes challenging to arrange the required money for any sudden life challenges such as medical emergencies.
A huge amount of money is often needed for significant life events. These may be things like getting married, buying a new automobile, launching a new business, or sending your kids to college. Of course, having some extra money on hand can help in happier moments like these.
The funds you require to pay for these and other associated costs can be accessed with the support of a personal loan. A personal loan enables you to take out money from a financial organization with predetermined terms and interest rates. You agreed to repay any money lent plus interest over a certain period (usually two to five years) in exchange for these amounts.
Why is a Personal Loan a Perfect Financing Choice among Others?
Multipurpose uses are flexible for a personal loan. These can be for a variety of reasons, such as wedding-related, education, medical costs, business investment, or unforeseen financial needs. Since this type of loan is unsecured and does not require collateral, the majority of banks and NBFCs do not inquire as to why the borrower chose to take out the loan.
For instance, you might borrow a specific sum of money from a bank to renovate your house. But you might also need it for an emergency expense. Since it has had no impact on the loan’s repayment, the objective of the loan may alter even after it has been taken out.
Personal Loans Assists You in Realizing Your Goals
Everybody has hopes, dreams, and goals for their lives. It could be that you wish to repair or refurbish your home, buy an all-new vehicle, or study abroad. Although the requirements and goals may differ, they are all bound by the requirement for money to be achieved. It is becoming harder to save enough money to cover all of your needs without a little outside assistance because wages are declining and expenses are increasing. That’s why personal loans from reputable lenders are useful.
Let’s Look Into a Few Scenarios in Which a Personal Loan from Refer Loan Can Assist You in Tackling Life Challenges.
- Expenses for Higher Education: You may wish to supplement your education with a new degree or acquire a new skill or technology that will enable you to advance in your work more quickly. You can increase your earning potential and pay for these necessities with a personal loan from Refer Loan’s partner lenders.
- Renovating Your Home: You may be residing in an elderly parent’s home that requires immediate repair and reinforcement. In these circumstances, securing the funds required without taking out a home loan may be easy and swift with a personal loan.
- Wedding Costs: Since marriage ceremonies are once-in-a-lifetime occasions, they also entail significant financial outlays. Most of the time, one must spend more money than they have saved to fulfil their goals regarding their wedding ceremonies. That’s when a hassle-free personal loan can come in handy to help pay for the added costs.
- Dream Trip: Only a true travel enthusiast can appreciate the allure of a dream trip. Occasionally, you may feel that your money is better off being used for more urgent future requirements or financial security. So you may have to put off your ambitions of visiting Europe or seeing the cherry blossoms in Japan. But in such cases, personal loans can be the ideal solution.
- Purchasing a Car: You may easily apply for a used automobile loan if something new seems to be too expensive. These modest personal loans can work amazingly well and swiftly assist you in reaching your objectives.
- Launching a Business: Gaining seed or early capital is always difficult, and if you intend to get into trade, you’ll need things like furnishings, technology, raw materials, equipment, and even final products to sell. Lots of banks offer simple personal loans that you can use to cover your business’s initial capital requirements.
- Medical Expenditures: Emergencies involving health are costly and unexpected. It’s probable that your insurance is insufficient or that the policy does not cover the illness. You would have to cover the cost of the medical bills out of pocket in such a case. You can worry-free concentrate on your recuperation by using personal loans to help you pay for all of these costs.
- To Pay Off Credit Card Debt: Since personal loans have substantially lower interest rates than credit cards, many consumers choose to transfer their balances and pay off their credit card debt. Additionally, because the payment is made in the form of monthly instalments that are automatically taken from your banking account, the process is much simpler and smoother.
6 Common Reasons Why a Personal Loan Gets Rejected
You might have your loan application denied if you don’t give it enough thought. Knowing why your loan application was or might be rejected will benefit you the next time you apply for a loan.
- Poor Credit Rating
Your credit score, which is a numerical value between 300 and 900 that essentially indicates your trustworthiness, is a major factor in a lender’s decision to approve a loan. Lenders usually have a minimum credit score requirement before approving a personal loan. You won’t be approved for the loan if your credit score is lower than this. Applicants without a credit score may also be turned down because your lender won’t be able to evaluate how you spend money without a credit history.
How Refer Loan Can Help You to Get Out of This and Secure a Loan?
A credit score of 750 or above is normally considered optimal for loan acceptance. If your credit score is lower, take the appropriate steps to raise it. Before submitting yet another loan application, verify your credit score on Refer Loan’s website. Refer Loan’s informational blogs will help you keep a good credit score so you can get credit easily in the future.
As an alternative, you might apply for a personal loan from NBFCs since they have less stringent credit requirements than banks. In contrast to banks, NBFCs also charge higher interest rates on personal loans.
If you don’t have any credit history, stay away from applying for a loan from a lender if you don’t have any previous records. They can deny your application. In such a situation, get in touch with a lender that you already have an interpersonal connection with or a salary account with. Asking for a reliable personal loan, such as one secured by a fixed deposit, is an excellent additional alternative that you might consider.
- Several Loan Applications and Inquiries at Once
When you inquire about their offerings, you can wind up asking for personal loans from several lenders. But be aware that the bank collects your credit report from the Credit Bureau and verifies your credit score whenever you ask for a personal loan. The credit agency views these as hard queries. For this, your credit score will suffer and it will be mentioned on your credit report. In the end, this casts doubt on your financial trustworthiness and makes you appear to lenders and banks to be credit-hungry and in dire need of money.
How Can Refer Loan Solve this Problem?
For this reason, one way to solve personal loan rejections is to apply through a reliable platform like “Refer Loan.” Without allowing it to affect your credit score, you can investigate and compare possibilities from leading personal loan providers here. You can select the lender who best meets your loan needs according to the offer.
- Larger Outstanding Debts
A higher-than-average amount of outstanding debt is another factor leading to the denial of a personal loan. When you apply for a personal loan, your potential lender may believe that you are overly indebted and risk defaulting if you have at present multiple open credit accounts, including credit cards and loans. Due to your significant debt load, you may be rejected for a personal loan because the lender considers you a risky borrower.
At times, several borrowers purposefully reduce their current loan repayments to get a larger loan amount. This might go wrong, though, because lenders check your credit reports before authorizing a loan, taking into account all of your outstanding debts.
Consequently, your application for a personal loan may be denied as a result of this kind of false information.
Steps You Can Take
Make sure you only take out credit card loans and loans based on your ability to repay them when necessary. If you are unable to repay your loans, try not to take out more than one. Additionally, maintain a clean payment history and make sure the proportion of secured to unsecured loans remains equitable, even if you have taken out several loans. When compared to secured loans, there should be fewer unsecured loans.
- Unmet Income Requirements
Lenders want to know that they will receive their loans back on schedule before extending them. Lenders verify the applicant’s income to guarantee loan payback on schedule. A steady and sufficient income indicates that you will have the means to make all of your EMI payments on schedule.
Because they have set sources of earnings and amounts, salaried employees are therefore in a better position to qualify for a personal loan than self-employed people. Most financial institutions have set minimum income requirements for self-employed and salaried borrowers. If the size of the personal loan you have asked for exceeds your eligibility, your loan application will probably be denied.
How Can Refer Loan Benefit You to Handle This Matter?
You need to speak with your lender before completing the loan request form to avoid this requirement. You may also search for NBFCs where your yearly earnings are not the primary factor. To avoid applying harshly and being turned down, it is best to determine how much of a personal loan you qualify for based on what you make. To find the best personal loan options based on the amount you earn, check below to see Refer Loan’s partner lenders.
Lender | Minimum Salary (per Month) | Loan Amount | Loan Tenure | Rate of Interest | CIBIL Score | Processing Fees |
PaySense Personal Loan | 20.00 k | 50.00 k – 10.00 Lacs | 6 Month – 60 Month | 18% – 22% (Reducing Per Annum) | 700 or above | 2% – 5% |
Werize Personal Loan | 12.00 k | 30.00 k – 5.00 Lacs | 12 Month – 36 Month | 15% – 22% (Flat Per Annum) | 650 or above | 3% – 5% |
Money View Personal Loan | 15.00 k | 5.00 k – 5.00 Lacs | 3 Month – 60 Month | 17% – 36% (Reducing Per Annum) | 650 or above | 1% – 5% |
IDFC Bank Personal Loan | 20.00 k | 1.00 Lacs – 40.00 Lacs | 12 Month – 60 Month | 10.49% – 22% (Reducing Per Annum) | 700 or above | 1% – 4% |
InCred Personal Loan | 15.00 k | 50.00 k – 10.00 Lacs | 24 Month – 60 Month | 16% – 33% (Reducing Per Annum) | 650 or above | 1% – 5% |
Aditya Birla Personal Loan | 20.00 k | 1.00 Lacs – 50.00 Lacs | 12 Month – 84 Month | 12% – 28% (Reducing Per Annum) | 650 or above | 1% – 4% |
Finnable Personal Loan | 20.00 k | 50.00 k – 10.00 Lacs | 12 Month – 60 Month | 16.95% – 30% (Reducing Per Annum) | 700 or above | 1% – 5% |
Hero Fincorp Personal Loan | 15.00 k | 50.00 k – 10.00 Lacs | 12 Month – 60 Month | 9.5% – 16% (Flat Per Annum) | 700 or above | 1% – 5% |
Muthoot Finance Personal Loan | 20.00 k | 1.00 Lacs – 7.50 Lacs | 12 Month – 60 Month | 14% – 22% (Reducing Per Annum) | 685 or above | 1% – 3% |
Upward Fintech Personal Loan | 20.00 k | 25.00 k – 5.00 Lacs | 6 Month – 36 Month | 18% – 32% (Reducing Per Annum) | 650 or above | 2% – 5% |
Cashe Personal Loan | 12.00 k | 10.00 k – 4.00 Lacs | 4 Month – 4 Month | 1.5% – 3% (Fixed Monthly) | 550 or above | 1.5% – 2% |
Fibe (Formerly EarlySalary) Personal Loan | 15.00 k | 8.00 k – 2.00 Lacs | 3 Month – 36 Month | 15% – 30% (Reducing Per Annum) | 550 or above | 1% – 2% |
Stashfin Personal Loan | 20.00 k | 5.00 k – 5.00 Lacs | 9 Month – 36 Month | 2.45% – 4% (Fixed Monthly) | 725 or above | 2% – 2% |
Shubh Life Personal Loan | 12.00 k | 5.00 k – 2.00 Lacs | 3 Month – 24 Month | 28% – 44% (Reducing Per Annum) | 650 or above | 1% – 3% |
Loan Tap Personal Loan | 12.00 k | 50.00 k – 7.00 Lacs | 12 Month – 36 Month | 11% – 24% (Reducing Per Annum) | 675 or above | 1% – 2% |
Kreditbee Personal Loan | 16.00 k | 1.00 k – 3.00 Lacs | 1 Day – 4 Month | 1.5% – 3% (Fixed Monthly) | 550 or above | 5% – 6% |
FlexSalary Personal Loan | 8.00 k | 4.00 k – 2.00 Lacs | 6 Month – 60 Month | 1.5% – 3% (Fixed Monthly) | 550 or above | Rs. 300 – Rs. 750 |
MoneyWide Personal Loan | 20.00 k | 10.00 k – 3.00 Lacs | 3 Month – 36 Month | 17% – 24% (Reducing Per Annum) | 650 or above | 1% – 3% |
Insta Money Personal Loan | 15.00 k | 5.00 k – 25.00 k | 1 Month – 6 Month | 13% – 36% (Reducing Per Annum) | 650 or above | 1% – 4% |
Cholamandalam Personal Loan | 20.00 k | 1.00 Lacs – 35.00 Lacs | 6 Month – 60 Month | 14% – 22% (Reducing Per Annum) | 675 or above | 1% – 3% |
SBM Personal Loan | 20.00 k | 50.00 k – 25.00 Lacs | 6 Month – 60 Month | 14% – 20% (Reducing Per Annum) | 700 or above | 1% – 4% |
- 5. Uncertain Employment History
The approval of a personal loan is heavily influenced by your profession and employment history. Lenders like to lend money to borrowers who are employed by reputable companies. Therefore, your application may be denied if the organization you work for is not registered or listed.
Additionally, the majority of banks provide personal loans to borrowers with a consistent employment history. Your application for a personal loan is likely to be denied if you don’t have a steady job or if you have a history of leaving jobs repeatedly. The majority of banks prefer their clients to have steady jobs or businesses with consistent revenue. Lenders view people who change employment frequently as less deserving of loan approvals. Additionally, they may set higher interest rates on personal loans.
Steps You Can Take
Keeping a solid job history can help ensure that your application for a personal loan is accepted. Lenders for personal loans typically require that you have worked for a minimum of 3 years, with at least one of those years spent with your current employer. If you are self-employed, your company needs to have been operating for three to five years at the very least. But this could differ depending on the lender.
- 6. Inaccurate or Missed Document(s)
Only when your documents are checked will your application for a personal loan be accepted. The financial institution may deny the loan request if any of your documents are missing or contain inaccurate data. The other paperwork that you submit with your personal loan application is just as crucial as the form itself.
Your name, age, residence, and other details you provide on your loan application are crucial for lenders to gather the information they need to know about you. Your loan request will be denied if lenders discover errors in any of these or other facts provided in your loan request.
How Can Refer Loan Help You to Solve This?
Check out the list of necessary documents in advance and ensure you have them ready. Keep scanned copies of all the paperwork if you’re applying online for a personal loan; if you’re applying offline, bring the originals together with the necessary copies. Make sure the original documents you have are in good order as well. Filling out the application form with attention and care is important. Steer clear of overwriting, but make sure you present all the necessary information accurately and without typos. Enter the name and address that appear on your KYC documents. Additionally, before filling out the form for a personal loan, be sure every detail you present is correct. You can apply through Refer Loan’s platform to get easily approved for personal loans with minimal documentation.
Bottom Line
It’s crucial to be able to get a personal loan, even though it helps you be ready for tough financial times. A rejection of a personal loan request once it appears on your credit report makes future loan applications more difficult for you. It is essential to keep in mind the aforementioned points and to apply for a loan only when you are certain that it won’t be denied. It is best to make improvements before applying if you believe you fall short of any of the requirements.