- August 25, 2021
- Posted by: admin
- Categories: Banks, Blog
Loans become a necessity soon more than a tool to make your dream successful. But the bank examines you many times, prior to approving your loan applications and sometimes they reject your loan application. That is why you need to know why do banks reject bank loan applications. It can be a big problem but to deal with this you need to contact Taskmaster professionals who will provide you with the right guidance on the loan application and its documentation. Here we mentioned a few things that will help you to understand the points of your loan application rejection.
The Reasons to Reject Loan Application
- Debt-Burden Ratio
In simple words, the sum of all your payments on the monthly term plus 5% of the limits of credit on all your credit cards has not exceeded 50 percent of your certain monthly income. It has been compulsory by the UAE central bank and all the banks have to comply with this condition. Keep in mind, banks are wary of lending to people who are already heavily in debt.
- Credit History
Al Etihad Credit Bureau makes a capable lending entity to make informed decisions while assisting you to know your creditworthiness. An AECB credit report makes capable banks view all the credit cards and loans you have and your repayment track record. Failure to pay your monthly installments in a timely manner can lead to a negative credit rating. You can examine your own credit history by requesting your credit report for a charge of almost AED 100.
- Nature of Work
Not like salaried group borrowers, self-employed figure out it tough to acquire a loan, particularly if they are owners of small businesses. Self-employed borrowers don’t introduce as much conviction among bank officials as the last enjoy a fixed level of job protection and sustainable income. For the self-employed to protect a loan, before requesting the bank, the borrower should have robust documentation. If the bank figures out any miscalculations related to your income tax filing, they would not waste time in the rejection of your loan application.
- Type of Job
Banks also abstain from enlarging loans to salaried staff working in some sectors, as there are inherent hazards included in lending to this section. Those working in police departments, for instance, may not figure out banks as anticipated to provide them loans. A similar goes for journalists and lawyers. Such borrowers can have to give a guarantor for their loan to set up the loan. Banks also sustain a companies’ list they have put limitations on funding. In case the builder is coming into this list, you need to find another lender.
- Frequent Job Change
In your opinion, this has definitely by none of their business, as long as you have the ability to repay. If someone should really care about it, this must be your employer. Although, financial entities also give adverse attention to the fact that you have been changing jobs frequently. This assumption is based on the assumption that you can lack the stability and commitment which works as a pre-requisite to meet a long-term obligation like a loan.
- Signature Mismatch
This is probably a very careless mistake that may cause the rejection of a loan application. The borrower is expected to sign many pages of the form of the loan application. Signatures on all these points should be similar. In case any discrepancy is found in this matter, the bank would reject your loan application.
- Address Mismatch
The bank would send its representatives to examine your present address. This would also send its employees to supervise your working address and whether you work in that office actually. You will have to be at these places when the bank staff arrives. If they don’t find that you are the location, the lender would not start the procedure of loan.
- Application Form Errors
Call it negligence or due to lack of attention to information, and error while giving your personal information may cause your loan application rejection. Generally, banks cross-check and try to rectify these errors but this is wise to check many of your loan application forms prior to submitting them.
Based on the type of loan you are applying for; banks are typically on the lookout for some red flags that could lead to your loan application being rejected. Loan applications face a huge number of rejections as this is unprotected finance. prior to applying for any kind of loan, make sure that you fill an application form correctly and carefully, examine whether you are eligible as prescribed by the bank to match the eligibility criteria, and make sure that you have a robust credit standing to minimize the possibilities of rejection.
Read More – How To Get Business Loan In Dubai