‘It is easy to get a loan unless you need it’ – Norman Ralph Augustine.
A harsh truth, right? Every day you might get hundreds of calls, texts, or emails from different banks and financial institutions ready to provide you a personal loan. However, suddenly, when you need a loan, it becomes next to impossible to get your loan approved.
In fact, Digital Finance Analytics research showed that around 40% of the loan applications and 48% of the refinance applications were declined in 2018.
Moreover, another study reported that 42% of Australians feel that their lenders do not understand their financial requirements. That’s why there are several barriers to getting their credit approved.
Nonetheless, whatever the reason for loan rejection is, it is of the least importance when you need money. In such a scenario, all that matters is- how can you get your personal loan approved? Perhaps that is also the reason why you are reading this article. Right?
Well, then, our dear reader, you are in the right place. We will tell you the measures that’ll minimize the chances of your loan rejection. To know what these are, keep on reading.
Ensure That You Qualify for the Loan
First of all, you need to ensure that you are qualifying for the loan. No matter what type of personal loan you want to borrow, you need to meet the following eligibility criteria:
- The minimum age of applying for the loan is 18 years
- Must have Australian citizenship or a permanent residency
- Be a regular employee (no probation period is allowed)
- Fulfill the minimum income requirement of the lender
- Address proof
- Proof of income (payslips)
Besides all these requirements, if you have borrowed any loan previously that you are still paying off, you need to provide its details to your lender. In addition to this, you also have to prove that you are not involved in the process of bankruptcy.
Understand How Much You Can Repay
Every financial institution provides you different loans at different rates of interest according to your repayment capacity. It is one reason why people complain about getting less amount of money at a higher interest rate. Therefore, the experts at Plenti.com.au suggest comparing the loan amount and interest rates before you borrow.
It will help you understand how much money you will owe to the lender and if you can repay it. Only after fully understanding this you should apply for the loan amount to borrow.
Keep Your Credit History in Check
The most common reason behind credit denial is poor credit score and history. Why’s that? When you don’t pay your bills and dues on time, your credit score gets adversely affected. And further becomes a hindrance in a loan approval. Therefore, you have to ensure that your credit history is up to the mark (between 622 to 725 or above).
To Sum Up
Borrowing a loan involves various formalities and makes the process long. Besides, even after a long waiting period, if your loan gets rejected, it becomes disheartening. Therefore, before you apply for the loan, make sure that you meet the eligibility criteria, have all the required documents, good credit history, and have the capability to pay back the loan.
This way, the chance of credit denial becomes almost zero.