Just because your bank loan got rejected doesn’t mean you should lose hope. There are still plenty of other avenues to pursue. In most cases, a lender will reject your loan if your credit history isn’t great, if you’re young and don’t have a stable job, or if you’ve already taken on too much debt.
Here are some of the ways you can deal with a loan rejection:
Look for a cosigner
You could always find someone who will be willing to cosign the loan on your behalf. It’s essential that you seek help from someone who is close to you and trusts you. A parent or a spouse can be of great help.
However, you need to approach a case like this very cautiously and responsibly. If you’re unable to pay the loan, the cosigner will be liable to pay. If both of you fail to make the payment, the two of you will see a significant drop in your credit scores. Therefore, you need to think through this decision.
Identify the cause
Before you retry your luck, it’s essential to understand why your loan got declined in the first place. Most lenders will be glad to give you an explanation and provide disclosures.
In most cases, loans get rejected as a result of low or no credit. Very lender prefers a concrete history of borrowing and repaying loans. If you’ve defaulted on loans in the past, the loan application can definitely get rejected.
Other reasons include a high debt-to-income ratio, unverifiable job, insufficient income, and/or lack of collateral. Your application might also get rejected if your length of residence in the country seems too short for the loan.
Get a hard money loan
Hard money loans are issued by private lenders and are ideal options for those who have a below-par credit score. A hard money lender is primarily concerned about collateral value and not your monthly paycheck and creditworthiness.
As long as you are able to secure the loan with collateral, you should be able to qualify. Besides, hard money loans aren’t really bound by any regulatory requirements. This is why they get processed efficiently and quickly.