Reasons Banks Reject Your Loan Application
Did you at one time applied for a loan and the banks accepted your request? What did you think was the fault? The bank had no money or they didn’t just want to give you the loan?
But many people do apply for loan and their application is granted. The fact is banks are even happy when people do come to ask for loan.
Moreover, there are terms and conditions that is apply when individuals or corporate bodies come asking for loans. Many people wishing to start a business or expanding an existing one needs cash and you already know that the number place to get loan is from banks.
Many banks today are refusing to give loans due to many reasons that has made difficult for loan application to be granted easily. Some banks even still refuse to grant loans even when you have a good bank record.
There are many mistakes people play when applying for loans from banks or during processing the loan which can result in the loan being rejected. I will try to present some reasons banks reject loans application so that your next business loan application will not be rejected.
TOP REASONS FOR BANK LOAN APPLICATION REJECTION
1. Lack of Planning
One reason why banks reject loan application or why your loan application was rejected is due to lack of planning. Before you think of applying for a loan, you need to seat down and draw a plan on how you wish to approach them and you can ensure your loan application will not be rejected.
You need to first decide the type of loan you need and the financial institution that is best for it and that can approve your loan application. List as many you can find, it will help you fetch for a lender that is very interested and want you to succeed.
After you have found the best bank, make sure the bank understand the nature of the business you are requesting the loan for and what you are aiming for.
2. Poor Credit Report
For sure, any bank will consider this a risk. Your credit report it the actual record of your bank account history. It is important you have a good bank account records because it is the first thing the bank will want to look before even considering other factors.
If you have a good credit report and was still rejected of your loan application, then there could several reasons like how you filled the loan application form. It better you leave a field blank, it will be assumed by the bank that you don’t understand that part and so will invite you for interrogation.
Another reason for being rejected for loan applications by a bank if you have a good credit report are; bad handwriting, financial disclosure.
3. Improper Documentation
Some people don’t like disclosing their personal information, and they may end up omitting or lying about some details. Peradventure the bank notices, the bank will reject your loan application and even if you try to defend yourself by not inputting some vital information, it will destruct your eligibility to get your loan approve.
Also, have it in mind that vital statement in your application form must have document backing, so make sure you have them with you. So, this step need to done with care so you don’t make a mistake that might lose you the chance of getting the loan.
4. Bad Business Proposal
Normally, banks expect to see a proper or professional well-written proposal when someone is applying for loans. This is the only chance for you to prove to the bank that you really know what you want and can explain it to them as an investor.
The proposal must incorporate a description of your business, the amount of funds asked for, it ought to likewise incorporate why you are looking for the funds and the sum that you will contribute.
The proposal ought to advise how you are going to reimburse the funds. This is the thing that expected to serve as a basis for your credit application.
5. Interview Mistakes
After the loan application form has already been filled, the bank then invite you for an interview to get more information from you that may not be available in the form. These questions are the most common questions asked in banks or any financial lending institutions when applying for loan;
• How much do you need?
• Why do you need the money?
• How do you plan to repay it?
So, arm yourself of the answers to these questions. Obviously, not being prepared to answer these questions can lead to banks rejection of your loan application. You should be prepared to explain to the loan officer how you intend using the money and how you plan paying back and when you can guarantee the possibility.
Also, showing low confidence during the interview session can lead to the loan officer rejecting your application.
In conclusion, the next time you are planning for a loan application, make sure you follow the steps explained above so you know that you are not committing any mistake so you don’t get rejected of your application.