If you have applied for financing from your house bank or an online bank, the loan may be rejected for various reasons. As uncomfortable as that is, there is no need to worry. There are solutions to the reasons for refusing a loan as well as alternatives to financing. Often there are even unjustified reasons such as a wrong credit record entry.
There are different reasons for a loan being declined
One of the most common reasons why funding is refused is temporary employment. This does not secure your financial future, which can cause a bank to refuse the loan. The amount of your salary is irrelevant.
The same applies if you are still in the trial period for a new job. Here, too, there is a risk for the bank that you will not be able to make repayments on a regular basis if you do not maintain the permanent contract. One solution is to wait a while longer until you have an appropriate employment contract and regular income is secured.
Pay attention to the bank statements
If your loan is declined, a look at your bank statement can also be worthwhile. Because there can be reasons for rejecting a loan. For example, you have
- too little income
- little monthly financial surplus
- Returns of debit orders
all of this affects the bank’s confidence that you can make regular repayments. Return debits in particular are a signal for poor financial practices. The same applies to a visible overdraft facility that you already use with your salary account. Like several other current loans, these offer reasons for rejecting a loan that puts additional pressure on your financial situation.
Pay attention to creditworthiness and age
If a loan is rejected, this can of course also have something to do with your negative credit rating. This or the corresponding score expresses the probability that you will meet your payment obligations. The higher this is, the better your credit rating will be. However, a bad credit record Score will result in your new loan being rejected. The same may apply to your age. Because the probability also depends on whether there is a default or not.
What can you do if the loan is declined?
If your loan application to the bank is rejected, you should find out what was the reason. In any case, you should stay calm and check the circumstances carefully. An unauthorized negative credit record entry may trigger the rejection. You can easily have this credit record entry corrected. Of course, you can also simply contact another financial institution with your loan request. If you basically have a regulated economic life, there is a chance that you will receive a so-called loan without credit record from another bank.
Alternatives if the loan was declined
If your loan is rejected, you should always talk to the bank. Perhaps there is a possibility that you will still get a promise with the support of guarantors or the use of collateral such as life insurance or real estate. If the loan is rejected because an internal bank scoring is negative for you, you have the option of obtaining a loan from another institution. Because you should know that each bank creates its scoring on lending very individually. Even if you urgently need the additional money, you should not visit any number of financial institutions and apply for a loan there. Because every such credit request can have a negative impact on your credit record , which in turn increases the possibility that your credit will be rejected again.
Bet on a loan without credit record
An alternative, which should be assessed with great caution, is a so-called credit record -free loan. This is mostly given by foreign banks such as Swiss credit. This has to do with the fact that German financial institutions are obliged to have their economic data checked by credit record . If your loan is declined and you choose this alternative, you should carefully review the financing terms. You have to expect that interest rates will be significantly higher than for normal loans. Apart from that, there is a risk that you will catch a dubious provider.
Personal loan as an alternative
One possibility that is becoming increasingly popular in the financial sector is that of private loan financing. You can register your concerns on the relevant portals and search for investors for your financial support. When a private person contacts you who helps you with a financial loan, it is important to negotiate favorable terms and to record everything in a contract.
The pawnshop is also a possible way out
If your loan is declined and you need a smaller amount of money right away, pawning a valuable item, such as jewelry or your car, can also be an alternative to financing. The value of the pledged item is assessed and paid to you. You then have three months to repay the borrowed money, including taxes, and redeploy the item.