Was your latest moneylender loan application turned down? Well, it happens sometimes. So, you don’t have to be worried.
Usually, when you need a loan and apply, you expect it to get approved. But that’s not the case. Sometimes, your loan can be rejected, especially if you don’t meet one or more specific requirements.
Therefore, in this post, you will gain valuable insights into the reasons for your rejection, empowering you to make informed decisions and be better prepared next time.
7 Reasons Your Moneylender Loan Application Was Rejected
1. Bad Credit Score
Moneylenders often check their customers’ credit histories through the Credit Bureau Singapore. They might hesitate to approve a loan if your score isn’t up to par.
Your credit score is like your financial report card. Your lender will review it to gauge your financial performance. Understanding this can enable you to improve your score and increase your chances of loan approval.
If your credit score is low, it could signal to the lender that you’ve had trouble managing debt. Late payments and defaults in loan repayments drag your score down.
2. Your Income Isn’t Stable or Sufficient
The lenders must be able to assure that you can pay back the loan.
If you are freelancing or self-employed, you do not have a fixed income, so you can’t be sure of your repayment. Your income stability is likely doubtful, low, or irregular, making it difficult for money lenders to believe in your ability to repay the loan.
Similarly, your application will be rejected if your income level is low enough to meet the lender’s minimum monthly requirement.
3. You’re Already Burdened with Debt
Singapore-based lenders would not lend you money if you already have a heavy debt load. Therefore, the lenders will classify you as not creditworthy if you already have several loans. They will calculate your debt-to-income ratio or the percentage of income you spend on servicing ongoing payments on debts.
The higher the percentage of your income you use to service other loans, the less likely you will be able to afford additional financial obligations. This should make you cautious about taking on more debt and responsible for managing your finances.
4. Incorrect Documents and Dishonesty
Submitting half-baked or incorrect documents is a sure way to get rejected. This should instill a sense of accountability and diligence in ensuring all your documents are in order and accurate.
Standard documents needed are your NRIC, proof of income, and proof of residence. Therefore, double-check these documents and ensure you don’t forget any of them to avoid being rejected or delayed unnecessarily.
5. You’ve Taken Too Many Loans Recently
When you borrow vast amounts of money within a short time frame, you get branded desperate or broke. That is why lenders take so long to advance the cash.
Therefore, space out the time when you borrow and borrow only if there is no other option.
6. You Don’t Qualify Under the Eligibility Criteria
While essential qualification criteria apply to moneylenders, each has unique requirements for the borrowers. For instance, some moneylenders will loan you only if you are a Singaporean or permanent resident.
Also, others will require you to produce evidence of employment by your current company for some duration. Therefore, should you fail to meet the cut in the requirement criteria, your loan application will be rejected.
7. Your Loan Purpose Is Unclear or Not Qualified
The licensed money lenders are responsible for ensuring the loans are used for a good purpose. Therefore, the lender will decline your loan if you cannot provide a good reason for taking the loan.
Also, if the reason is speculative, the moneylender will likely deny you the loan. Therefore, always be ready to provide the real reason for borrowing the money.
What to Do Next You are Denied Moneylender Loan
If your loan application is rejected, it is not the end of the world. The rejection should be a lesson for you to review your finances to understand what went wrong. Then, plan and put in the effort to increase the chances of getting your loan approved the next time you apply, giving you hope and motivation for the future.
Lastly, upon proper preparation to apply, choose a Singapore-based licensed moneylender who suits your requirements and offers flexible repayment terms.