Why is a personal loan declined? Today banks and financial institutions only grant loans under certain conditions. Forget the past times where getting a sum of money was within everyone’s reach. Today only by having a paycheck, or a pension or a solid balance sheet, you can access credit. It is no coincidence that the most used tool is that of the transfer of a fifth of the salary.
In this guide we will find out why it happens that your funding is refused and what are the strategies to prevent this from happening.
It can happen that when applying for a personal loan this is refused, most of the time the applicant is perplexed and cannot understand what led the banking or financial institution to refuse the file. This is because communication with the bank is not always simple, especially when issues related to the disbursements of loans that can be influenced by complex factors are faced.
Let’s try to understand, therefore, why a loan can be refused by the credit institution and what a customer can do to avoid it so as to save time and money, managing to obtain liquidity quickly.
Its non-disbursement is usually linked to various aspects, including the insufficiency of the repayment capacity of the person who requests the loan. As a general rule, you must demonstrate that you have sufficient income to guarantee payment of the repayment installment. By agreement, banks and financial institutions do not grant loans whose installments exceed 30% of their monthly income.
This means that if you earn 1000 USD per month, the loan installment cannot exceed approximately 330 USD. Obviously, the assignments of the fifth are privileged, in particular to pensioners and civil servants. In these cases it can even reach 40% of the income installment ratio.
The loan is refused if the person requesting it already has other open financing contracts that commit more than a third of the income, this to avoid possible situations of excessive indebtedness, it is a sort of act of responsibility of the bank to avoid putting the customer in an unsustainable situation.
The failure to pay installments of past loans or protests that have led to a negative reporting by banks in the CIFR register.
The entities that provide the loan can consult the private databases at any time, in this case, before a person is entered, he must be informed and have given written authorization for his insertion.
It should be borne in mind that in most cases the authorization to query the databases is included in the loan request contract and that therefore the applicant automatically approves his / her inclusion.
If the loan is denied, the bank or the entity that refused it is obliged to inform the customer of the reasons that led to the denial, also highlighting the negative information found in the bad payer’s databases.