Are you looking for guidelines on how to avoid loan rejection whenever you apply for a loan in Nigeria? If yes, please this post carefully because we have the full guide on how you can prevent loan application rejection here.
Savings may not always be sufficient because money is a necessity for purchasing what you need. One of the simplest ways to obtain short-term funding is to take out a personal loan. However, it might be discouraging to have your loan request denied, especially after going through the tiresome procedures. Being rejected for a loan is never a pleasant thing, therefore you should learn how to prevent it.
How to Avoid Loan Rejection in Nigeria
Here are the possible methods you can take to prevent loan rejection whenever you apply for a loan in Nigeria.
1.) Obtain the Required Credit
Before approving a loan request, one of the main considerations is credit, and each lender has different credit standards. You must make sure that your credit score is acceptable and that your prospective lender’s credit standards are met because a good credit score increases your chances of acquiring the loan.
2.) Reach the required minimum income
This is the bare minimum of money you consistently make. To ensure that you have the financial means to repay the loan by the due date, the majority of lenders have a minimum income demand. Make sure you have a stable source of income because some loan companies in Nigeria may require your employment history for a specific amount of time. This will help to increase your chances of getting easy approval for the loan.
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3.) Have a Collateral That Is Equivalent
Collateral is something you promise to give up if you can’t repay a loan. Because it reduces the risks they face, lenders will want equal collateral as a guarantee when a loan application is made.
Collaterals may be in the form of cash or real estate; to avoid having your loan application denied, make sure you have a strong enough guarantee.
4.) Debt/Income Ratio
The amount you can borrow is determined by your debt-to-income ratio. A high DIT indicates that you are borrowing more money than you can afford to pay back, which is bad news for lenders.
Try to pay off any bills you still owe before applying for a loan because most lenders will verify your credit history before approving your application.
To demonstrate your ability to pay back debt at the agreed-upon time, you should also make sure that your debt-to-income ratio is less than 43%.
5.) A requirement document should be provided
As part of your application, your lender will ask you for some supporting documentation. These records include bank statements, paystubs from the bank, a copy of a valid ID, a letter of assurance, and any other records your lender may require. Before submitting, make sure to check your documents and provide the correct information.
6.) Prevent using too many applications
Too many loan applications submitted in a short may be rejected.
It is essential to make sure you have paid off your debt or at least paid off half of the loan before asking for another loan if your loan application is approved.
Too many applications will decrease your income’s predictability, increase your debt-to-income ratio, and push you below the eligibility threshold.
A word of caution
Your loan application may not always be granted; this is not guaranteed. Even if you satisfy all the lender’s standards, you could still be rejected. You should also educate yourself on supply chain finance access.
It is actually up to the lender’s discretion. You must still play your part, though, by being careful to avoid errors that could result in the denial of your loan application.
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FAQS
Can I reapply for another loan if I have being denied earlier?
Yes, however after being rejected, you must wait at least a month before applying again.
What is the easiest loan to get from Banks?
Payday loans, automobile title loans, pawnshop loans, and personal loans without credit checks are the loans that are simplest to be approved for.
