If you are seeking to obtain an unsecured personal loan, it is important to note the reasons the lender might not approve the loan. If you comply with the criteria listed below, you should be able to obtain a loan with minimal fuss. However, if you find yourself being rejected, all is not lost as there is another way to go about securing a loan.
This is probably the most important factor to consider when you are about to apply for a loan. If you do not have a sufficient income, it is doubtful the lender will approve your application. You should try to find out the income requirements of each prospective lender before you apply to them.
You need to specify what the loan is for. If it is for home improvements or a new car, then the lender will view the application with consideration. But should you require the loan for, say, gambling, then the lender will raise a red flag immediately. It is important to note that if the lender finds out the loan is being used for a purpose which you haven’t specified, they will look unfavourably on this and might end the loan.
Fill in every section of the application with care and diligence, because the lender might reject your application if details are incorrect.
The lender will read through your employment history when considering your application. If they note that you have been unemployed for extended periods of time, they might disapprove of your loan. Specify all of the places you’ve worked and your role there. If you are working in a shop, for instance, say which department and what your position is.
If you’re just seeking a loan to pay off another loan, the lender will raise an eyebrow and probably reject your application. Furthermore, if you already have various unsecured loans, you will find it hard to obtain a new personal loan.
This factor comes into play if you have one or more assets. If you own your house, you will be a step closer to securing a loan than if you are renting as a tenant. If you own other valuable assets, you should declare these to the prospective lender.
One thing you may not have thought about was that the number of times you apply for personal loans could go against you. Each time you apply, an inquiry is added to your credit rating. When added up, these may not work in your favour, so be mindful of how many times you apply and only try to obtain a loan when you really want one.
Ultimately, when you apply for a personal loan it is completely down to the lender’s discretion to approve you or not. Should you be unsuccessful, you could try to secure a guarantor loan. This is a loan where a third party, usually a family member or a friend, will co-sign the credit agreement. Essentially, they are guaranteeing that they will repay the loan if you fail to at any point.