There is a wide array of loan options available in the market and lenders are extremely cautious before lending money to borrowers. All the loan providers adhere to their internal guidelines before sanctioning a loan. It is important for everyone to understand some major reasons lenders reject loan applications. In this article, ShubhBank have put together some unimaginable reasons you may be denied a loan and dampen your hopes of a successful application.


  1. POOR CREDIT HISTORY: Every lender always refers to your Credit Information Report before approving on your loan application. If you have had problems repaying the existing loan in the past, it will show up on your credit report and may result in rejection of your loan application. To maintain a good credit score, check your report for inaccuracies from time to time.
  2. NO ELIGIBILITY CRITERIA OF AGE: The minimum age for availing a loan is required to be of 18 years. Every lender requires income proof especially for applicants between 18 and 21 years of age.
  3. UNSTABLE EMPLOYMENT: Inconsistent job history could land you in trouble while Apply for a loan. They associate your work consistency with your repayment capability. The minimum criteria should be six months in the current job with a total work experience of more than 2 years. Switching to new job every six months may not be well received by lenders. You also need to show the same consistency with regards to your residential address.
  4. LESS INCOME: The approval on loan application also depends on whether you meet the minimum income criteria. This criterion varies from lender to lender. If you do not meet the criteria set by the institution, your application could get rejected. If you have a co-borrower with you, he/she should also have to meet these requirements.
  5. PENDING EMI’s: If you are already repaying the existing EMIs and your total amount paid each month is more than 50% of your income, you risk being denied a loan. There is no defined maximum number of loans that one person can own, but lenders might be less inclined to sanction you a loan if you already have a significantly large number of existing loans.
  6. POOR BANKING:When lender verifies your documents for eligibility calculations, they also review your bank account to understand your financial behavior. It is mandatory to provide your last six month salary statement. There should be no minimum balance charges in your statement.
  7. PHYSICAL VERIFICATION: A lender will initiate the physical verification of your workplace and home before sanctioning a loan. It will give the confirmation of your job stability and standard of living through this process. Your incorrect home or work address stated in your application may increase your chances of loan application rejection.

Now you’re aware of the reasons for rejection, so you must have to wise about your choices. If you want to go ahead and apply for any of our “Loan Products From ShubhBank as we have different offering on different loan options.