Bank Loan: If the bank refuses to give a loan then know what option you have...


For banks, customers are God, but sometimes banks refuse to give loans even to their God. If your loan application (Loan Refusal) is rejected by the bank, then you should know the reason behind it. Let us know why your loan application is rejected.

For what reason was the loan cancelled?
If the bank refuses to give you a loan, then find out what was the reason behind it. It is very important to know the reason for loan rejection. Many times banks refuse to give loans due to small reasons.

For example, your address verification remains incomplete. Sometimes there can be serious reasons behind loan cancellation. For example, banks cancel your loan due to poor credit rating (Reason for credit rating).

Banks do not give loans even due to low-income
When the bank feels that your income is not sufficient then the bank postpones the loan. Banks want to ensure whether you have the capacity to repay the loan or not.
Therefore, banks want to collect in-depth information about your income and bank account. Unless your income matches the standards set by the bank, banks refuse to give you a loan.

A bad credit score is also the reason
In most cases, the biggest reason for refusing to give a loan is the bad credit rating. For example, the CIBIL score ranges between 300-900, and 750 is considered good.
According to CIBIL, 79 percent of bank loans have been given to those whose score was above 750. Similarly, the ranking of Companies Credit Report (CCR) for companies is decided on a scale between 1 to 10. The company with the number 1 score is considered to be the best.

This rank is given only to those companies whose debt is between Rs 10 lakh and Rs 10 crore. According to CIBIL, 70 percent of the companies in the country whose ranking is 4 or above are eligible to get loans.
Therefore, if your bank refuses the loan because of credit rating, then definitely take a detailed report from the credit rating agency.

Many times credit agencies show old loan padding.
When you get your detailed credit report (Rs 550 for individuals and Rs 3000 for companies), read its complete details.
There is a big possibility that a mistake has been made in your credit rating. For example, the loan that you have already repaid may sometimes be showing as pending in the CIBIL report.
So if you find such deficiencies then cross-check and ask the credit rating agency to correct them.

Choose another bank
Every bank has its own rules and regulations when giving loans. If one bank refuses to give a loan then talk to another bank. It is always beneficial to apply for a loan in your bank branch.
If your bank refuses to give the loan, then choose another bank. In many cases, rural banks and regional cooperative banks have less stringent conditions. The possibility of getting a loan quickly increases in these banks.

Increase the down payment
If you apply for a loan for any kind of purchase like a home or car loan, then you can increase the down payment amount of the loan. This increases your chances of getting a loan easily.

The biggest advantage of this is that your loan EMI reduces and the debt burden also reduces.
Settle old debts
Many times you are not able to get a new loan because the amount of the old loan is high. Generally, banks want the debt-to-income (DTI) ratio to be around 35 percent and more than 40 percent of DTI falls in the risk category.

When DTI is calculated, your old personal loan, car loan, home loan, and credit card outstanding are taken into account. If the loan has been rejected due to DTI, then first clear your old loan.


Add a guarantor or co-applicant
If your income is not enough to get the loan approved, then try to include a co-applicant. This could be your wife, other family members, or friends.

Get an instant loan by mortgaging property
Many times the loan is made quickly by giving collateral. This may also include your old house, if you fail to repay the EMI then the bank can return its money by selling it.

Do not apply again and again
Once the loan is rejected, do not apply to the bank again and again. Instead, find out the reason for loan rejection. Many times your credit rating also decreases due to rejection of the application.

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