02 July 2024 | By INDIE
Personal loans are a vital financial tool to manage unexpected expenses, fund major life events, or consolidate debt. However, the ease of access to personal loans in India doesn't guarantee approval. Understanding how to navigate the application process can reduce the chances of rejection.
It can be disheartening to know that your application for personal loan is rejected. It can even delay your financial plans. High debt-to-income ratios, poor credit history, insufficient income, unstable employment, and errors in the application are some of the common reasons for rejection. It is crucial to address these issues to avoid rejection of your personal loan.
The following strategies can enhance your eligibility and secure approval for your personal loan:
What is FOIR? This ratio measures your monthly debt against your income.
It is ideal to ensure that your FOIR is below 40% to demonstrate to lenders that you have sufficient income to cover new debt.
Example:
Source of Income |
Amount (₹) |
Monthly Salary |
50,000 |
Existing EMIs |
15,000 |
FOIR |
30% |
The Credit utilisation ratio is the percentage of your available credit that you are currently using. Aim to keep this below 30% to show lenders you're not overly reliant on credit.
Regular and timely repayment of debts boosts your credit score and builds trust with potential lenders. You can set reminders or automate payments to ensure you don’t miss the due date.
Applying for multiple loans simultaneously can signal financial distress. Instead, focus on clearing existing debts before seeking additional credit lines.
Double-check all entries for accuracy and completeness before submission. The errors or discrepancies in your loan application can lead to instant rejection.
Lenders prefer lending to individuals with a stable job history. Consistent employment with the same employer for at least two to three years is favourable.
Include all verifiable sources of income such as bonuses, secondary jobs, or rental income. Any additional income lowers your perceived risk to the lender.
Also Read: The Convenience of Instant Loans
A line of credit is an alternative financial product that provides flexibility and ease of use compared to personal loans. It allows to borrow up to a certain limit and pay interest only on the amount used, making it a convenient option for ongoing expenses.
While personal loans can be incredibly useful in managing your financial life, the approval of your application depends on how well you present your financial health and stability to the lenders. By maintaining a low FOIR, managing your credit utilisation, ensuring timely repayments, limiting the number of simultaneous loan applications, providing accurate information, showing employment stability, and declaring all sources of income, you can significantly increase your chances of approval and avoid the distress of a personal loan rejection.
Borrowing wisely is as important as borrowing itself. Manage your finances prudently, stay informed about your credit health, and choose the right products like the Credit Line by INDIE to keep your financial journey on track.
With its straightforward application process and quick disbursement, Credit Line serves as an excellent tool for those who require funds but want to avoid the complexities of a standard personal loan application. Whether you need to manage unexpected expenses or fund a personal project, Credit Line by INDIE provides a dependable financial buffer.
Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.
