Top Reasons To Know Before Applying For Personal Loan

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By: karann
on 17th Jun,2013

While opting for a personal loan, the chances of rejection of your application are high.
Top Reasons To Know Before Applying For Personal Loan


While opting for a personal loan, the chances of rejection of your application are high. There are ample amount of reason behind why lender usually reject applications with great risk. The rejection of the loan application comes under their risk management program. Whenever the lender feels a hint of risk involved in lending you the money, then they are likely going to reject your application form.

Learning about the reason why applications forms are rejected will help you to make the necessary changes to be done before filling out the application form.

Know your credit history:

Before lending the money, lenders always take a look on the track record of the borrower's payment. Having a poor credit history will surely create a lot of difficulties before you while applying for a personal loan. However the same difficulties are faced by those who do not have a credit history. If you have never applied for the credit card it's better to apply for it now, because having no credit history will diminish your chances of borrowing money. However there is good news for those who do not have a credit history. Developing a new track record of your credit is now easy, as all you have to do is apply for a credit card and use it for few months. Repay all your money in time, repeating this process for few months will enhance you credit rating and lenders will see you as profit rather than a risk.

Insufficient income:

Before lending money to you, lender will have a look on your monthly income status. If you do not make enough money to repay your loan, then the lender will see you as a high risk. Before opting for a personal loan it's better to make sure that you have permanent and reliable resource of income. The lender will make sure that you have enough money to repay all your debts in time as well as manage your daily expenses in order to approve your loan application.

Using collateral:

Borrowers having poor credits are mostly suggested to apply for a secure personal loan in the form of collateral. Applying for secured personal loan will lower the interest rates and will increase your chances of borrowing money. Collateral to secure the loan is used to reduce the risk that is taken by the lender. If the borrower is unable to provide collateral for his personal loan, then the loan application of the borrower will not be approved.

After learning these reasons the borrower will be able to make necessary changes before applying for a personal loan.

 

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