Was your personal loan applications denied yet again, but you have no idea why? Why? Banks typically reject loan applications for a variety of reasons. Banks are highly cautious when it comes to determining your eligibility for loan approval. When you do not meet their requirements, they are likely to reject your application.
We will inform you in this article why it happens,
What could be the cause for your personal loan applications being denied?
Employment Type (salaried or self-employed):
Most banks in the UAE will authorize a loan for people who work for a company that is listed in their own database. This makes it easier for banks to check your financial soundness. In general, significant enterprises are included where they present their financial results to banks on a regular basis or where banks have previously visited and confirmed the company profile.
Minimum Salary Requirement :
Every bank has a minimum salary requirement for their personal loan products. The lowest minimum salary criteria across the board are AED 5,000. Although several banks have greater requirements as well. i.e., AED 8,000 or AED 15,000 depending on the goods.
As a result, double-check your net take-home pay and apply only if it meets the minimum standards.
Salary transfer to the same bank:
Most of the banks will approve the loan easily if the applicant has their salary accounts on the same bank where they are applying for the loan. This is because the bank will find it less risky as your income is going to them from which they can automatically deduct the monthly loan instalments when your salary is credited into your account.
Debt Burden Ratio:
The debt burden ratio will have a major impact on your loan approval. My debt burden ratio is calculated by adding all your monthly repayments to the monthly income you earn. According to the UAE central bank, the EMI should not cross 50%. In other words, you will not be given the loan if your DBR comes more than 50% of your salary.
Credit score:
Banks can access your credit history by acquiring your credit report from AECB, the credit report includes all your current credits, debts, missed payments which allow them to calculate DBR as well. The credit score will determine your chances of getting a loan. If you have a poor credit score it reflects negative remarks on your credit report. And a poor track record of repayments is a strong reason for banks to reject future loan or Credit Card applications.
Age:
The eligibility criteria also take age into account where it ranges from 21 years, and the maximum is 65 years at maturity. If your age is not in the range, then your loan application would get rejected.
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