5 silly mistakes you can make for your personal loan to be declined or delayed


Personal loans are easy to obtain these days. Infact if you are eligible, most banks and NBFCs will compete to give low interest rates and extend other offers to get your business. Read more about personal loan interest rates here. The entire process has also been made simpler what with technology coming into the scene. You can now visit a loan aggregator site like ours to get more information, calculate eligibility & EMI, compare offers between different banks and ofcourse apply for a personal loan with any bank that offers you the best deal. Some service providers also take you through the documentation process and if you are approved, then money is automatically credited to your account.

Simple right…but not very much so if you do not pay attention to the smallest of things and make silly mistakes. In many cases, loans have been delayed or worse declined because you got one small thing wrong. There are product review sites filled with angry posts about how a specific bank or NBFC has treated a customer. While many of these are genuine reasons, there are a few which could have been avoided. Here are 5 cases in which you can be extra careful so your personal loan is neither denied not delayed.

  1. Not using your credit card: One of the important factors that banks use to approve a personal loan and extend a rate of interest is your CIBIL score. This score is given based on your debit transactions and your payment record. One of the factors tracked is your credit card usage and payments on the bills. Some of us do take a credit card but see it as a device of temptation. Many don’t use it at all other than in case of an emergency. One of the big mistakes is to have a card and not use it. In such a case your CIBIL score is calculated as 0 or -1, which gives lending institutions no clue on how you react to debt, making you a risky investment for personal loans. Check out your CIBIL Score by visiting the website here.
  2. House not in your name: A recent case which came to light was of a woman who applied for a personal loan. She fulfilled every factor of eligibility and was a perfect candidate for getting a loan but it was still denied. The reason being that she was living with her brother and hence had no record or proof of residence. Lenders ask for proofs of lease or utility bills to prove you have been living at your address for some while. A simple solution in case you are living with someone (parents/siblings/relatives/partners) is to have a nominal rental agreement drawn to prove your residence. Read more about eligibility on this page.
  3. ITRs: Many times, if our salary is lower or if we have not worked for some time or if it is a proprietary business, we ignore filing our Income Tax Returns. It is a small process which can be done online and there is no reason to not do it. Most loans are delayed due to this small oversight because Banks/NBFCs ask for your ITR as a criteria before granting a loan.
  4. Address proof mismatch: Another error which can delay or decline your loan is a mismatch between your address on the application form and the proof you provide. Many of us do keep moving between addresses and there is a high chance we are not staying at the sample place (or permanent residence) from where we applied for a passport or PAN card. So submitting these as address proof when you are staying somewhere else is a mistake you can avoid. Always go for a lease agreement or utility bill.
  5. Gross salary vs Net salary: It is again a common mistake to quote your gross salary instead of your net salary when searching and applying for a loan. Banks and NBFCs look at your capability of paying an EMI every month when approving your loan and hence net salary is the most critical aspect. Quoting a gross salary just defeats the purpose as banks will get to know your net salary from other sources and this is a fair ground for dismissal of the request.

So these are the 5 reasons which might get your personal loan request delayed or denied. A fair option is to consult our experts and avoid these pitfalls. Here is another article on 10 common mistakes people make around Personal Loans.