Reasons for rejection of your car loan application

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Reasons for rejection of your car loan application
Easy financing schemes offered by banks and financial institutions have made purchase of high-value luxury items such as a car really affordable. But many a times, banks reject application for car loan despite an individual earning a decent salary. One of the reason that may be cited by the financial institution for the loan application rejection among other possible reasons may be low credit score.

Credit score determined by credit bureaus on the basis of the credit history of an individual is a 3-digit numeric figure in the range of 300-900. Some of the leading credit bureaus in India include CIBIL, Experian and Equifax. Each of the credit bureaus adopt a different methodology to compute the credit score. Usually, a credit score of 700 and higher is deemed as good.

In order that your loan application does not gets rejected on this ground, you need to ensure a good credit score by maintaining good credit history. Credit history that is a snapshot of the current as well as past credit relationship of an individual with the financing company can be well maintained by servicing debt obligations in full and in a timely manner. Note, rejection of loan application in a previous instance also shows up in the credit report, so without due consideration do not apply for loans simultaneously at two institutions as it impacts your credit report badly.

However, in case you inadvertently have become the victim of low credit score and poor credit score and due to it are facing rejection in each of your financial attempt, you can turn to credit repair companies which will you in restoring your finances.

Other possible reason of loan application rejection may be in a case when you are already trapped in too many ongoing loans and bank adjudges that another loan will impair your ability to discharge  debt obligation towards existing loans. Job stability and other such factors that determine loan repayment ability of an individual are also taken into account while approving the loan application. So, it is highly likely that loan application of a person who hops job on a regular basis and shows up lower job-stability gets rejected.

GoodReturns.in

Story first published: Wednesday, January 8, 2014, 13:05 [IST]
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