A personal loan is an unsecured loan. It helps to fulfil all types of financial requirements. Many take it to pay for a travel trip, medical emergency, wedding, home repair, and other emergencies. There are several lenders who provide this loan today, and the State Bank of India (SBI) is one of the leading banks amongst others who provide lowest interest rate on the loan. You can apply for personal loans on Loanbaba or any other online platform, which helps you secure the best offer after comparing banks and NBFCs offers.
Even if you fill the application form correctly, there is a possibility that the State Bank of India will reject your loan. There could be several reasons to it, and we have listed top 5 reasons for personal loan rejection, below.
- Poor Credit Score/History
The State Bank of India will firstly access your credit report to check the credit history and credit score. To apply for a personal loan, your credit score must be above 750. Anything lower, will be considered as negative, and the bank may reject you the loan. Even if you get the loan approved, it will be at a higher interest rate than the standard.
The bank will assess your repayment capacity before looking at other eligibility norms, because if you cannot repay the loan, then the financial institution will never risk lending you money. It is advisable to make regular payments and not exceed credit card limits, to maintain a decent credit score.
- Insufficient Income
When applying for the loan, the State Bank of India will ask for your income proof. You have to submit last 6 months salary slip and 1 year’s bank statement. If your income is not sufficient to accommodate the EMIs of the loan, then there are low chances of loan approval. Minimum income requirement is usually Rs. 25,000 per month. The bank will check your existing financial liabilities and analyze if you can take a new loan, and repay in a timely manner.
If SBI is dissatisfied with your income, then it will not offer you the personal loan. Another point to note is that, salary slip is a must or some proof that assures the bank that your salary gets credited in your bank account. In-hand salary in hard cash will not be accounted as income.
- Unstable Employment
SBI requires the applicant to be employed with the current employer for at least a year. Total work experience must not be less than 2 years. This is the minimum require. However, if you have changed jobs often, such as every 6 months or perhaps there was a gap between jobs, then the bank may reject the loan application. Lenders are careful about the stability of your job and source of income. The bank will insist on a stable job, and if this criteria is not fulfilled the personal loan will be rejected.
- Outstanding Debts
If there are too many debts to handle, such as unsecured loans and credit card loans, then the bank will check whether your income is enough to support the new loan you have applied for. If the debt to income ratio does not satisfy SBI, it will reject the loan application. Since several ongoing debts can also mean financial burden, the lender will take preventive measures, and rather disapprove the loan, than offer you an unsecured loan.
Make sure you make timely repayments for existing loans and if you wish to apply for another loan, your income must be such to accommodate the monthly EMIs of all the ongoing loans, including the new one.
- Too Many Applications
Each time a financial institution access credit report to check your credit score, the inquiry made is considered as a hard inquiry. Your credit report will be accessed on every loan application. Too many hard inquiries in a short span can affect your credit score. Thus, the more the number of personal loan application, greater is the chances of lowering of credit score, and thus lesser are the chances of you securing a loan. If the bank finds that you have made too many applications, it may not trust you are a credible candidate and assume that you are credit hungry, rejecting the loan.
Consider the above-given factors that can cause rejection of your SBI personal loan application, and be cautious about these when applying for the loan with State Bank of India.
