Was your bank loan application rejected? Don't worry, here is how you can still raise money
Well, it could be a major heartbreak for a salaried employee planning to buy a dream house or fund a big wedding. It may lead to questions like why exactly was the loan application rejected? Or, how to meet the looming financial requirements now?
With the prices of automobiles and properties skyrocketing, it has become tough for most people to buy them. In such situations, bank loans come as a relief, allowing dreams and desires to be fulfilled. But, what happens if your loan application is rejected? Well, it could be a major heartbreak for a salaried employee planning to buy a dream house or fund a big wedding. It may lead to questions like why exactly was the loan application rejected? Or, how to meet the looming financial requirements now? Fortunately, there is no need to worry as there are a lot of other ways to raise money even if your bank loan application is rejected.
But, before exploring the alternatives, it is equally important to find out why exactly bank rejected your application. This could be due to a number of reasons. In some cases, just identifying the problem could help solve it and eventually, get loan from the bank.
Why application was rejected?
Kshitiz Mahajan, co-founder, Complete Circle Consultant explained that just like companies, the individuals are also rated. "This rating is given by CIBIL on the basis of your credit history. This might include your credit card repayment cycle, loans etc. The problem is most people are not even aware about their defaults. For example, there are times when people cancel their credit card but forget to take a no dues certificate. Even if there is a small amount like Rs 50 left, it would increase to Rs 2500-Rs 3000 after interest rate and penalties. Also, it reflects in your CIBIL score as non-repayment," he told Zee Business TV.
Mahajan said that in this case, it is important to find the real cause. "For this, you need to generate the CIBIL report. This can be applied for by paying just Rs 500 on the CIBIL website. After identifying the cause, you can contact that company and get the issue resolved," he added.
Why home loan gets rejected?
When it comes to home loans, borrowers are more careful about their CIBIL score than in other cases. Still, in some cases, the application is rejected. This could be because of some problem with the property.
"In case of home loan, the property is also scrutinised. The bank agency will check if the property is legal, all the maps are in place or if the floors are constructed as per approval. Also, the loan is usually 10 to 12 times of your monthly salary. In fact, some banks only offer 6 to 8. But, borrowers have more expectations and are often left disappointed. So, it is important to understand your repayment ability," Mahajan said.
What are the other options?
As mentioned earlier, there is no need to worry even if banks reject your loan application. Mahajan explained that there are a number of other options like borrowing money from NBFCs, or taking loan against mutual funds or gold. He said that the upper limit of CIBIL score is 900 and in case you are score is 600, you may not get loan from a bank.
"In this case, NBFCs might come your rescue. However, you will end up paying higher interest rate as compared to the banks. This eventually increases your EMIs and adds to financial burden," he said.
Mahajan explained that if the NBFCs don't entertain you as well, there are other ways to get loan as well. "You can opt for loan against gold or loan against property. In fact, you can even get loan against mutual funds - both equity and debt," he said, while adding, "Another way to raise money is through your employer. Here, you can take loan in the form of advance salary. The drawback would be that this loan would taxable unlike other forms. The amount borrowed is deducted each month from your salary."