You have applied for a two-wheeler loan at a financial institution recently, but unfortunately, your loan has been rejected! Unexpected events as these come up quite often while dealing with monetary matters. So, you must get to the root of the issue, and understand the reason of your loan rejection. Applying somewhere else hurriedly could also be a wrong decision. Since, you got a chance to rectify your errors and apply for a loan application afresh; you should check and update your credit record thoroughly before approaching another lender. Financial institutions provide you with loans based on certain relevant facets, such as your age, income, job stability, and credit worthiness to repay the loan amount. In case there is a discrepancy noted in either of these significant areas, there are high possibilities of your loan to get rejected. Let us look at some of the primary reasons which can affect your CIBIL record, and maybe the reason why your two wheeler loan was rejected.
Main reasons why your two-wheeler loan is not approved:
Your residential address has made it to the defaulter list
Most banks and lenders maintain a database of defaulter list, which keeps a detailed record of the defaulters’ addresses. It might be the case that someone living in the same address before you has missed a loan repayment, and has therefore been reported to CIBIL. The reason of your loan rejection in this case might be an overlap of the same residential address.
Bad Credit Record
You have slipped up on a lot of credit card dues, and have hence accumulated a lot of pending loan payment. This makes your credit history blacklisted. Most financial institutions consider poor credit records as the most legit reason to reject a loan in a jiffy!
Burden of too many loans
Sometimes, too many loans cause a severe stress on your daily income. In such a scenario, your real income is considered as the amount that remains after subtracting your ongoing credit repayments from your total income. This could indicate your disability to repay the new loan amount, thereby leading to a loan rejection.
You do not have a great luck being a Loan guarantor
As a loan guarantor, you are held responsible when the applicant who you have vouched for does not pay up a loan amount. In situations like these, you are compelled to repay the loan on their behalf. If you are unable to do so, the bitter repercussions reflect in your credit report.
Your co-applicant has a bad credit history
Sometimes, you end up being in a fix due to someone else’s mess. Such is the scenario in the money-lending business as well. You may have been eligible to borrow money as per the norms, but, if your co-applicant has a bad credit history, it is quite likely for your loan to be rejected as well.
You are a compulsive job-switcher
If you do not have job stability, you are not guaranteeing your true worth of repaying a loan to the money lender. Most banks and NBFCs would only entrust people, who have stable jobs, with a lump sum amount of money.
Your loan application has been rejected before
Make sure you have rectified your previous mistakes before applying for a two-wheeler loan again! Repeating the same mistakes would lead to the same disappointment every time.
Having said that, let us now walk you through these important pointers which can help you plan your steps before applying for a two-wheeler loan:
- Calculate your net worth, and loan repayment ability.
- Get a credit report from CIBIL, and go through it thoroughly.
- In case there are any defaulters indicated in your CIBIL record, update the information by submitting a proof to CIBIL.
- Keep backup funds in case any unexpected situation comes up.
- Make the maximum down payment so that you can repay the EMIs without a financial pressure.
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