Personal Loan got Rejected? Here are 7 Reasons Why!
Let us first acknowledge the fact that money indeed has the power of solving most of our issues in life.
Often, we end up facing such situations where we may need some additional funds than we already have. In such circumstances, you can get a personal loan in UAE at a low rate of interest from banks and other financial institutions.
Do you know the reason?
Out of all the available loan options, a personal loan is the most convenient and easiest way of securing short-term or emergency finance needs like travel, wedding, education of your child, home renovation, or some other personal requirement.
Without a doubt, applying for a personal loan is quite simple. All that you need to do is fill up your basic information and submit them online to get immediate or fast approval.
However, the fast loan application process does not guarantee loan approval. Your lender verifies the information you have given in your loan application before providing approval for it. You must make sure there is no discrepancy in the information you have provided. But some lenders may reject your loan application in certain cases.
Reasons for the Rejection of Personal Loan
Here is a rundown on a few common reasons which may lead to the rejection of your personal loan application.
After applying for a personal loan, the first thing that your bank or lender does is to review your credit history and credit rating. The banks may get access to your credit score through the Al Etihad Credit Bureau. The lenders can also check your Debt-Burden Ration (DBR) if you have ever taken a loan in the past. They also check the number of credit cards you have (if any).
All these attributes play an essential role in approving the application of your personal loan. A low or poor credit score might be a major reason for the rejection of your personal loan application.
In case you are applying for a personal loan in Dubai or any other Emirate of the UAE for the first time and have no clue what a credit score is-
Your credit score is typically a three-digit score provided to every individual. In the Emirates, an average credit score ranges from 300 to 900. Higher the credit score, higher are the chances of loan approval.
Submission of Invalid or Incomplete Documents
Another reason why your personal loan gets rejected could be the submission of invalid or incomplete documents. Providing the correct documents that confirm your eligibility for the loan is essential for getting your application approved.
Hence, you must make sure that you pay attention to all the guidelines for a personal loan application before submitting the documents. You should stick to the document list, which you need to submit. You can also make a list by yourself for ensuring that you do not miss any necessary document.
Each lender or banker reviews your present status of employment as financial stability is amongst the most essential factors for getting personal finance sanctioned in the UAE. If you keep switching your jobs frequently or if you have gone through a lot of ups & downs during your employment duration, then there is a high probability that your personal loan application gets rejected.
While the lender processes your application to get a personal loan in UAE, one of the important eligibility requirements for approval is to have a certain amount of regular monthly salary (as determined by the bank) either through a business or a job.
If the monthly income you are earning does not fulfill the eligibility requirement of the bank, then the possibility of the rejection of your loan increases. Your income is an important factor as it adds to your capacity of repaying the loan.
Hence, in case you do not fulfill the minimum salary requirement as determined by the loan provider, they will doubt your loan repayment capability.
Not Fulfilling Other Eligibility Requirements
Other than your income eligibility and credit score, there are various other eligibility requirements for obtaining a personal loan in the UAE. These requirements include nationality, age, residence, and at times your educational qualification, which you need to have.
Usually, your lenders go through your loan application multiple times because of all these reasons. Ensure that you meet all these eligibility requirements as determined by the lender, such that you leave no scope of loan rejection.
The banks and other financial institutions may thoroughly check your financial profile, even if you have borrowed a loan from some other lenders. Hence, it is highly recommended that you get a personal loan in UAE only when you really need it.
In case you have multiple existing debts with the bank already, then the probability of your personal loan getting rejected is higher. Since your debt-income ratio is high, it indicates that your ability to repay the loan on time is low.
Dubious Objective for Taking Loan
You should make sure that the loan you are applying for caters to your requirements efficiently. Other than personal loans, there are other loans that can be used for specific purposes only. For example, you cannot use a home loan for car financing. Your lender checks if the reason you have mentioned for taking the loan is the same as your actual requirement or not.
How to Avoid Personal Loan Rejection?
Now, that you know the reasons why your personal loan application may get rejected in the UAE, you can work on avoiding it. Mentioned-below are a few ways of doing the same.
- In case you apply for a personal loan through that bank, which has your employer listed on its list of approved companies, the probability of getting the personal loan approved becomes higher.
- Ensure that you maintain a clean and good credit record. You should try to settle all the outstanding debts before you apply for a personal loan. The more your lender finds you reliable and trustworthy, the more would be your chances to get your personal loan approved.
- You should submit all the documents required with accurate information. Always make sure that you verify your documents before submitting them.
- Before applying for a personal loan in Dubai, make sure you have all the necessary information regarding the eligibility criteria and documentation beforehand. It is advised that you complete all the important formalities properly at one time.
- Lastly, but most importantly, do not forget to review your credit history and report so as to ensure that all the necessary information is updated and correct.
The Parting Words!
There never is a total guarantee of the lender approving your personal loan application. Even when you fulfill the eligibility requirements that were predetermined by the lender, the lender may still decide on not approving your loan request.
You can keep in mind the tips mentioned-above while you apply for a personal loan so as to increase the probability to get a personal loan in UAE. Moreover, ensure that you remember the following must-do things when you apply for a loan- limiting the applications, checking your credit score, and maintaining a good credit history for procuring personal finance successfully.