Arun applied for a home loan a couple of months back and to his dismay his loan application was rejected. Now he wants to apply again but is in a dilemma. While he does not want to give up on his dream of buying a house for his family, he does not want that his effort and money (processing fee) get wasted again. So if you are in a situation same as Arun, we have a few suggestions for you:
Reapplying for a loan: Keep the Following in Mind
Re-applying for the loan once it’s rejected seems to be the most logical to do, however you do not want to repeat the same mistake or make a new one. So here is what you need to do:
Find Out the Cause of Rejection
Loans maybe rejected for various reasons and there is no single cause that will cause your application to be rejected. Thus it is important for you find out what is the cause for the loan application being rejected. If you are not sure about the reason then you can check with the lender as they have analyzed and rejected you application, so they know the exact cause for it. Unless you the exact cause of the problem rectifying it will not be possible.
Figure Out How to Solve the Problem:
Once you know what the reason for the loan rejection is, the next thing you need to do is figure out how to solve it. As we said there could be various reasons for it, your income levels may be low for the amount of loan that you would have applied for, your employment record might not be stable or you credit score may be low. It is always advisable to do a CIBIL score check before you apply for a loan so that you are sure about the acceptability of your credit rating when applying for your loan. In case your score is low then you will need to work on improving it, which will take time. Similarly it is important that you check about the income levels that may be acceptable for the loan amount that you are applying for. If the loan amount is high you could try and reduce the loan amount so that the application is accepted when you reapply.
Focus on the Documentation:
Loans can be rejected due to lack of proper documentation too. This will become clear when you check with the lender about the loan application rejection reason. So next time when you apply for your loan make sure that you focus on getting the documentation right. It is important that you not only get the missing documentation right but you need to also ensure that you do not miss out on any fresh document hen applying again. Documentation is especially important when applying for home loan or education loan. Lack of proper documents about the relevant permissions in case of home loan or about course acceptability when applying for a home loan can cause the loan to be rejected.
Do Remember to Check the Interest Rate:
When reapplying for a loan it is important that you check the interest rates. It is possible (even if you are applying after a small gap) that the interest rates may have changed. Home loan interest rate is especially reactive to macro economic conditions and can change within a small span too so do not assume that they will be same as before when you reapply for the loan. Even a small change can impact the EMI flow to a great extent. This applies to other loans as well, so do your homework again when reapplying for any loan. Check which lender offers the most competitive rates and the decide where to apply.
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