Reasons for rejection of loan application
By Joseph Samson
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Residential address on the defaulter list

If the applicant bears the same address as someone who has been a defaulter for either loan repayment or credit card dues and which has been reported to CIBIL, chances of loan rejection heightens. This is because the residential address will match with one on the defaulters list. In such cases, the applicant will have to discuss the issue with the relationship manager at the bank. The applicant should bring to the bankers notice that the defaulter doesn't have any direct relationship with the applicant in case of previous tenants. And if of family members, the applicant need to stress that the defaulter is not dependant on applicant.

Profile doesn't fit into the bank's internal policy

There are certain internal policies for every bank. For instance, if some geographic area or credit profile is listed in the banks' policy guidelines as negative for lending, the bank won't be able to sanction loan. In such case, one need to discuss it with the bank and provide other security in the form of a guarantor or in the form of insurance policies, collateral securities, fixed deposits, etc. And one needs to assure the banker about their repayment ability.

Banks do not fund for old building

A bank will not fund for old buildings especially if the building is more than 20 years old. The criteria of the age of the building vary from one bank to another. But, the land value will always be considered by the bank. One can negotiate for a lesser loan amount by adding in some form of security and one can also increase the down payment to get the loan sanctioned.

If the loan application has been rejected before
Every bank has records of the entire rejected loan applications in their database. When the applicant applies in the bank, the rejection will show up in the credit profile check and this would probably affect the credit worth of the applicant. It is highly advisable that one should not keep on applying for loans without any reason.

In case, if the previous loan rejection is other than that of default, the applicant should meet up with the credit manager explaining the reason for the rejection as the banks can reconsider its decision of rejection.
An individual planning to apply for any loan should be aware of the factors discussed above.


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