When you apply for a personal loan, it is hard to tell whether your application will be approved or not. If you get one rejection, it is less likely that you will get a loan from another lender. Here are some reasons why your loan application may be rejected.
Bad credit history
There are different levels of bad credit history. Defaulting is not the only reason why you will have bad credit history. You may have applied for multiple loans in the past few months and for this, you might have bad credit.
If you don’t have sufficient income then your application cannot be approved. This is because the lender won’t be confident that you will be able to repay the money every month. There is a minimum income threshold that must be met in order to get approved for the loan.
Dubious loan purpose
You should find out whether you are able to finance your thing with the loan you will get. Many loans have restrictions on how the loan can be used. For example, you can only get secured loans only by securing certain assets. For your car loan, you might have an age restriction. If your loan purpose is not credible, then you might not get the loan.
The lenders look for stability in your job. You should have a stable job, else your loan application will be rejected. If you don’t have enough employment history, then also you may not get the loan.
You should keep these points in mind and try to maintain good credit score, good income level, stable employment, etc. to increase your chance of getting a loan.