Loan Application Rejected: What Next?
When you apply for a loan there’s always the possibility, no matter how slight, that your application might be rejected. It can be a little disheartening if this happens, but it’s by no means the end of the road.
You still have some options if the bank or money lender rejects your application. We take a look at what to do if you’re turned down for a loan.
Find out why
The first step should be to find out why your application was unsuccessful. It’s not unheard of for loans to be erroneously rejected based on incorrect information. Make sure that all the information the lender has is correct.
If there are no errors but you were still turned down, ask what the reason was. It could be something simple – for instance, because you’ve only just started a new job or there’s an issue with your credit rating.
Common reasons for rejection
There are many reasons why the lender might not be able to approve your loan. Here are some of the most common:
- poor credit score or lack of credit history
- insufficient income
- too much other debt
- incorrect or insufficient documentation
- personal situation, such as age or work status.
Other loan options
If traditional lenders aren’t able to approve a loan for you, there are other options for securing a loan.
Asset-based loans
These short-term loans are based on a paid-off asset that’s in your name. Cars are commonly used assets when securing this type of loan.
The process is simple and loans can be secured quickly.
Company loan
A lot of companies will loan money to their employees, as long as the amount doesn’t exceed the employee’s ability to pay back. They’ll usually draw up a simple contract and deduct the repayment amount directly from your salary.
Because they control the repayments, they’re not likely to be concerned with your credit score.
Online loans
Some online lenders will offer small loans to people with poor credit at a higher interest rate to compensate for the risk involved. Peer-to-peer lending, for example, is a system based on independent investors lending money as a form of short-term investment.
They can make the personal choice to lend money to whomever they want as long as they can expect good returns.
Further steps
If your initial rejection was due to a poor credit history, then it makes sense to try and improve your rating. That way, if you even need to apply for another loan, there should be no issues.
Make sure that all credit repayments are made on time and, if you have a credit card, never let it become overdrawn. If you have a lot of debt, consider debt counselling and consolidate your debt where possible.
If you lack a credit history, get a credit account with a clothing shop (Edgars is a good option) and make a few small purchases. Then pay the instalments religiously until it is paid off. This will reflect well on your credit score.
Asset-based loans from Pawn My Car
At Pawn My Car, we offer same-day cash loans against the value of any paid-off vehicle in your name. Our interest rates are competitive, and we’re fully compliant with the National Credit Act.
For more information about using an asset to secure a short-term loan, contact us on 086 111 2866 or simply complete and submit our online application form.
