Top 5 Reasons Why Banks Reject Loan Applications & How You Can Avoid Them When Reapplying
Personal loans are a source of emergency funding for many people. But loan seekers must remember that applications for personal loans may get rejected. There are many reasons for loan rejection, and it is good to know them before applying. A personal loan rejection does not necessarily mean that you are not creditworthy. Understand the reason why you were refused credit loans, and you can easily avoid loan rejection when reapplying.
Here are the most common five reasons for loan rejection –
Poor Credit History
Individuals who borrow and repay loans on time have high credit scores based on their history of repayment. If you have never borrowed before or have defaulted on a loan in the past, this will reflect in your credit score and may get you a loan rejection.
Lenders analyze your income records to determine whether or not you will be able to afford the monthly installments. If the bank or the lender cannot verify your income with the information you have given or if they think that your income is insufficient – it may lead to a loan rejection.
Debt to Income Ratio
A high debt to income ratio means that you are already spending a large part of your income in paying off your current debts. This is important, as it helps lenders determine whether you can take on another loan payment or not. People with low debt to income ratio are never refused credit loans.
Living in a Location Where Defaults are High
It may surprise you to know that banks and lenders mark geographical locations where defaulters live. If your address reflects a location where many defaulters live, you could face a personal loan rejection.
What Should You Do Before Reapplying?
In case your loan application gets rejected, don’t worry. For refused credit loans, lenders are obligated to send a notice of adverse action informing the applicant about the reasons for denial of the loan. Here are a few simple steps you should take before reapplying.
- Take a Look at Your Credit Reports: Obtain your credit reports online for analyzing your credit history and score. Reviewing your credit reports will help you identify the problems such as late payment or defaults that led to your loan rejection.
- Evaluate Your Debt-to-Income Ratio: Taking a look at your current debts vis-à-vis your income will help you understand if you have sufficient income to repay the loan you had applied for. Creditors usually look for a debt-to-income ratio lower than 36% for good creditworthiness.
- Discuss the Loan Rejection with Your Lender: After analyzing your credit reports the best thing to do is to talk to your lender. They will guide you about the right reason why your loan application was rejected and how long you need to wait before reapplying.
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at firstname.lastname@example.org.
6 CRUCIAL mistakes coaches make when selling high ticket
High-ticket sales are something online coaches dream of offering to their potential clients, and equally, dream of landing killer sales.
However, once you’ve launched the offering, it’s now all about selling which often can be the most frustrating and tedious part.
Isabella Sanchez, business coach, specialises in helping life and wellness coaches sell high ticket sales with a small audience. She says: “ High ticket sales require leadership, honesty, and authenticity.”
Isabella shares with us the top 6 crucial mistakes that she has witnessed business coaches make when selling high ticket.
- Setting a price just because everyone does it
The perfect price is the price you can get behind energetically, period. Ask yourself: how much is the transformation worth? If you internally don’t believe the program is worth the price, it will show.
Pick a price you can sell with confidence. Confidence is 90% of the sale. If you believe it’s gonna sell, it will. If you are questioning your price, then the likelihood is, the consumer will also believe this. You can always increase your prices gradually if you are launching your first high-ticket package.
- You’re not painting an exciting vision
People pay for a transformation. Most coaches are talking about features 90% of the time instead of painting a picture of a transformation that excites your potential clients.
Get clear on the VISION: Talk about how life will be different for them vs. what’s going on now? THAT’S what matters. A good way to show the vision is previous client testimonials.
- Sell a transformation
People don’t buy hours of 1:1 coaching, worksheets, or video modules, they buy a tangible transformation. Link it to the tangible outcomes they can expect. For example if you’re selling mindset, don’t just sell them that they will “overcome self-sabotaging beliefs” but how that internal result will affect their day-today life such as relationships, career, income.
- Selling to a cold audience
When I started my life coaching business, I thought that by talking about it on social media, I would get dozens of people interested, but that didn’t happen. Not because I wasn’t a great coach, but because I tried to sell something to an ice-cold audience. I did not STRATEGICALLY build a foundation of free content and just expected people to throw their credit cards at me.
Create a strategic content plan to warm up your leads and build enough trust for the sales to happen naturally.
- You’re not connecting emotionally
High-ticket sales happen through emotion. Link your personal story to your offer: talk about how life was for you before your transformation and how it FELT. Then talk about how it is now and how that FEELS. If you learn how to do this not only will you sell high-ticket but clients you adore.
- Not screening your leads
Not everyone’s gonna be an ideal client for your high ticket offer and that’s okay. However, you don’t wanna be getting on calls with unqualified leads. You don’t have time for that.
Make sure you have a clear application form where you ask clear direct questions to determine if they’re a good fit, including a question about them being ready to make a financial investment. I like adding the investment to my application but totally up to you.
Do you want to master your high-ticket sales? Isabella is launching a beginners business coach programme which will teach you all you need to know about signing those high-ticket clients.