When sending out loan applications online, you may find yourself denied up to several times before your application goes through. It may be annoying not to receive a properly reasoned answer as to why you are denied, and it can lead to wasted energy, many unnecessary considerations and great frustration about your financial situation. Therefore, you should adjust your expectations and be realistic about the outcome. Doing so will improve both the chances of an application going through and your good mood.
Now remember that loans are business
It can be easily forgotten that companies that offer different loans actually run a business. If money is lent out to you, then they must be able to earn back with extra profit in sight. The loan concept among companies focuses on generating as high earnings as you can in a very short time by using interest and fees.
The companies are therefore selective with who can get a loan, and if there is no good opportunity to earn money, then there is no reason to offer a loan.
Therefore, do not take a loan in the belief that companies are focusing on helping you but have their own reasons for offering loans – and therefore also reasons for rejecting your loan applications.
What increases your risk of being rejected?
As mentioned earlier, the possibility of having its loan application approved depends on whether the company offering the loan considers it to be sound and a good earnings opportunity for the business. If one is deemed not to be able to repay a loan within the loan period, the lender will normally reject the application, especially if there is a high risk of delays in the repayment.
In short, as a loan applicant, you are assessed based on the risk of default on a loan and divided into groups by the lender on the basis of this. In addition, there are two risk groups, which especially find it difficult to take out a loan. You fall within the two groups if you are in the following situations:
1. If your income is too low
To be able to repay the borrowed amount within the specified loan period, it requires that you have an income where there is room for both paying the loan and the interest back. However, if you do not earn enough money or have an unstable income, this can be a reason why your loan application does not go through.
One’s income is one of the common factors that play in when you want to borrow. Each time you apply for a loan, the lender in question assesses whether you are eligible to take out a loan based on your income.
If the amount you have available during the month is very uncertain or low in relation to how much you have to borrow and when it will be repaid, it can easily end up being rejected. Therefore, there is often a fixed requirement for how high one’s income must be and where it should come from before one can take a loan.
If you have investigated these requirements to begin with, you can even exclude companies that do not fit your income and therefore save you a lot of frustration from getting rejected.
2. If you are noticed by a debtor register
Another reason why companies can give you a denial of your loan application is if you are registered with a debtor register or with RKI. Indeed, these types of registers show to loan companies that you are considered to be poor in paying back.
So how do you end up in the debtor’s records? This can be done by owing more than DKK 1,000 to a private creditor. If you have not repaid the amount, the company can initiate a case of a legal nature around the loan, which can result in either a voluntary settlement, civil litigation or court action.
Although one may think that these are private cases that only concern the creditor and you, your creditor may report you to the debtor’s records under these circumstances in order to have defaulted on the loan. It sends a signal to other lenders that you can be problematic to borrow money for.
Other companies can easily enter the registers when you submit a loan application. All they need is just your CPR number to see if you have been registered within the last 5 years.
If you are in a debtor register or RKI, there is almost no chance that you can borrow money regardless of whether you try in the bank or with the loan companies. Therefore, it is important to comply with the requirements for loans so that you do not end up in these registers.