Top 10 Reasons Why Personal Loan Gets Rejected in India

Applying for a personal loan seems like the easiest way to meet urgent financial needs — medical bills, weddings, education, or even day-to-day expenses. Yet, thousands of applications get rejected every day in India. The reasons are not always obvious, but understanding them can dramatically improve your chances of approval.

At Loansathi.in, we guide borrowers through the process and connect them with the right lenders. Here are the top 10 reasons why personal loan applications often get rejected — and how you can avoid them.

1. Low Credit Score

A credit score below 700 signals higher risk. Lenders assume you may default, which reduces approval chances.

2. Insufficient Income

Banks have minimum income requirements, often ₹15,000–₹25,000 monthly. Falling short of this benchmark may cause rejection.

3. High Debt-to-Income Ratio

If half your income is already going towards EMIs, lenders will hesitate to approve new loans.

4. Unstable Employment History

Frequent job changes or gaps in employment raise doubts. Lenders value stability when assessing repayment capacity.

5. Incomplete Documentation

Missing ID proof, salary slips, or address proof are common reasons for rejection — even for strong profiles.

6. Multiple Loan Applications

Submitting applications to several banks at once lowers your credit score and creates a “credit hungry” image.

7. Existing Loan Defaults

Past defaults create a red flag. Even small missed EMIs stay on record and affect future borrowing.

8. Overleveraged Borrowing

Having too many loans running simultaneously reduces trust. It signals financial stress to lenders.

9. Mismatch in Application Details

Discrepancies in PAN, Aadhaar, or employment details delay or derail approval.

10. Lender-Specific Policies

Sometimes rejection has nothing to do with you — it’s due to a bank’s internal rules (job category, location, etc.).

How Loansathi.in Helps You Avoid Rejection

• Compare multiple lenders on one platform
• Match loans to your income and credit profile
• Check eligibility before applying
• Ensure complete documentation
• Specialist support for previously rejected applications

Conclusion

Loan rejection is not the end. Most rejections happen due to fixable reasons. By improving your profile and applying smartly with Loansathi.in, you can turn rejection into approval. With access to 150+ Banks, NBFCs, and private lenders, Loansathi.in maximizes your chances of success.