How to avoid your personal loan being rejected

What you need to do to get your personal loan application across the line.

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There's no way of knowing whether you'll be approved for a personal loan. Not only that, but every rejected personal loan application is listed on your credit file. Receive just one rejection and the next lender may see this as a red flag, which may be enough to reject you again. Herein lies a big obstacle.

There's no trick to being approved for a personal loan, but there are some little-known ways that you can avoid the rejection pile. Read on to find out how you can avoid your personal loan being rejected.

Common reasons personal loans aren't approved

  • You have bad credit history. While "bad credit" is usually pooled into one, there are varying levels of bad credit. For example, you may have never defaulted on any loans or credit cards but you might have applied for five loans in the past two months. Check your credit score to see where you stand before applying (it's free with finder).
  • Insufficient income. The lender can’t approve your application if they find that your income won’t sustain your monthly repayments. Lenders usually have a minimum income you need to earn in order to be eligible for the loan, so check if there is one set. If not, work out what repayments you will need to make and if these will be manageable on your income.
  • Dubious loan purpose. Check that you're able to finance what you need to with the loan you're applying for. Many loans come with restrictions as to how the funds can be used. For example, secured loans can only be secured by certain assets and car loans usually have an age restriction on the vehicle your purchasing. Also, if your lender finds out that your loan purpose isn’t credible, your chances of loan rejection are quite high.
  • Incorrect details. Lenders will usually verify the details you put in your application and if they find inconsistencies they may reject you.
  • Unstable employment or insufficient employment history. Lenders are very meticulous about the stability of your job. Quite a number of lenders insist that you should have a stable job and should be out of your probation period otherwise they will reject your loan. Probation period times differ, but lenders usually require three months of payslips or six months for casual employees.
  • You hold too many loans. If you’re currently holding several loans this could give a lender cause to reject you.
  • Low value of secured assets. Lots of lenders have restrictions on the type of asset you can use as collateral for a secured loan, so if your asset doesn’t meet these requirements your loan could be rejected.

How to avoid your personal loan being rejected

You’ve seen the reasons your personal loan may be rejected, so how do you avoid these?

  • Check the credit requirements. You should check what credit rating your lender requires for its lending requirements, and then see if you meet them. If you're required to have good credit, it usually means no negative listings on your file. If you’re unsure, it’s best to ask the lender before you apply. The majority of lenders have online chat services that can offer assistance. As mentioned, check your credit score for free with finder to get an idea of your credit position.
  • Find out the minimum income. Each lender will have a different minimum income requirement, and this minimum may also change depending on the loan product you’re looking at. The minimum income is listed on finder.com.au review pages, so you can confirm this before you apply.
  • Ensure your loan purpose is allowed. Check with the lender to see if your loan purpose is okay. If you are taking out a secured personal loan there will be more restrictions, although you may also find limitations for other types of loans.
  • Verify your details. Double-check your details and information before you submit your application so that the lender has no reason to reject your application. Is your application filled out entirely? Have you provided any incorrect information? Any of these can lead to rejected personal loan applications.
  • Check you meet the employment requirements. Do you need to have been in your role for a certain amount of time? Do you need to be receiving a regular income into your bank account? See what the lender requires of your employment and ensure you meet that.
  • Don’t hold more loans than you can afford. In short, lenders want to be able to lend you money. The main reason they won’t lend to you if you have a number of loans already is they don’t think you’ll be able to pay it back. You could look at consolidating your loans or paying back some of them back before applying for any new ones.
  • Check your collateral is sufficient. See what your lender requires in terms of collateral and check that the asset you plan to use meets their requirements. If you’re in doubt, get in touch with the lender before you apply.

Related Reading: How much should you borrow for your car loan?

Personal loan comparison

Now that you know what to look for when comparing personal loans, compare a range of loans below. Once you have compared, you can continue reading to find out what not to do.

Updated January 26th, 2020
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Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Service Fee Monthly Repayment
RateSetter Unsecured Personal Loan - 3yr Variable
From 6.79% (variable)
8.83%
$2,001
6 months to 5 years
$299 (Based on $10,000)
$0
You'll receive a variable rate between 6.79% p.a. and 14.99% p.a. based on your risk profile
A flexible loan with amounts from $2,001 and terms starting from 6 months. Interest and comparison rates calculated for a loan term of 3 years.
Latitude Personal Loan (Unsecured)
From 7.99% (fixed)
9.24%
$3,000
1 to 7 years
$250 (Loans under $5000 - $140)
$13
You'll receive a fixed rate between 7.99% p.a. and 19.99% p.a. based on your risk profile
Apply for what you need from $3,000 and use it for a range of purposes. Flexible repayments options.
Wisr Personal Loan
Exclusive
Wisr Personal Loan
From 7.95% (fixed)
7.95%
$5,000
3 to 5 years
$0 ($595 waived)
$0
You'll receive a variable rate between 7.95% p.a. and 19.45% p.a. based on your risk profile
A loan from $5,000 that charges no fees for extra or early repayments. Keep in mind security is required in some cases. Note: For a limited time and exclusively through Finder, Wisr are offering a $0 establishment fee - usually $595.
Harmoney Unsecured Personal Loan
From 6.99% (fixed)
7.69%
$2,000
3 to 5 years
$500 ($200 for loans of below $5,000)
$0
You'll receive a fixed rate between 6.99% p.a. and 28.69% p.a. based on your risk profile.
Apply for a loan up to $70,000 and repay your loan over 3 or 5 years terms.
Symple Loans Personal Loan
From 5.75% (variable)
6.89%
$5,000
1 to 7 years
from 1% to 5% of the loan amount
$10
You'll receive a personalised interest rate from 5.75% p.a. to 19.99% p.a. based on your risk profile
Borrow up to $50,000 to pay for what you need.
NAB Personal Loan Unsecured Fixed
From 10.69% (fixed)
11.58%
$5,000
1 to 7 years
$150
$10
You'll receive a fixed rate between 10.69% p.a. and 18.69% p.a. ( 11.58% p.a. to 19.53% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.
SocietyOne Unsecured Personal Loan
From 7.5% (fixed)
9.51%
$5,000
2 to 5 years
from 3% of loan amount
$0
You'll receive a fixed rate between 7.5% p.a. and 20.49% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
Pepper Money Unsecured Fixed Rate Personal Loan
From 8.95% (fixed)
10.56%
$5,000
18 months to 7 years
4% of the loan amount, capped at $495
$13
You'll receive a fixed rate between 8.95% p.a. and 16.95% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Make additional repayments or pay off the loan early, penalty-free.
NOW FINANCE Personal Loans
From 7.95% (fixed)
9.56%
$5,000
18 months to 7 years
$495 (Based on $30,000)
$13
You'll receive a fixed rate between 7.95% p.a. and 16.95% p.a. based on your risk profile
Apply for loans from $5,000 and get a dedicated loan manager. No security required.
CUA Unsecured Fixed Rate Personal Loan
9.89% (fixed)
10.14%
$5,000
1 to 7 years
$175
$0
You'll receive a fixed rate of 9.89% p.a.
An unsecured loan from $5,000 with flexible repayments and no monthly fee.
Nimble Personal Loan
From 8.99% (fixed)
10.31%
$5,000
6 months to 4 years
$250 ($195 For Loans $5000 to $10000)
$0
You'll receive a personalised rate of between 8.99% p.a. and 29.99% p.a. based on your risk profile.
Borrow up to $25,000 over a 4 year loan term.
OurMoneyMarket Personal Loan
From 8.05% (fixed)
9.06%
$2,000
1 to 7 years
1.5–6% of your total loan amount
$0
You'll receive a fixed rate from 8.05% p.a. based on your risk profile
A personalised loan from $2,000 to $50,000 that varies based on your credit history and financial situation.
St.George Unsecured Personal Loan - Fixed Rate
From 11.49% (fixed)
12.57%
$2,000
1 to 5 years
$195
$12
You'll receive a fixed rate between 11.49% p.a. and 17.4% p.a. based on your risk profile
A low minimum borrowing amount of $2,000 to fund a range of purposes.
Westpac Unsecured Personal Loan
11.99% (fixed)
13.15%
$4,000
1 to 7 years
$250
$12
You'll receive a fixed rate of 11.99% p.a.
Benefit from the security of a fixed rate with the flexibility of additional repayments.
CUA Unsecured Variable Personal Loan
11.89% (variable)
12.15%
$5,000
1 to 7 years
$175
$0
You'll receive a variable rate of 11.89% p.a.
Borrow from $5,000 with the option for flexible repayments and no monthly fees.
NAB Personal Loan Unsecured Variable Rate
From 10.69% (variable)
11.58%
$5,000
1 to 7 years
$150
$10
You'll receive a variable rate between 10.69% p.a. and 18.69% p.a. ( 11.58% p.a. to 19.53% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes. Benefit from fee-free additional repayments and a redraw facility. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.
CUA Discount Variable Personal Loan (Loans over $30,000)
10.89% (variable)
11.15%
$30,000
1 to 7 years
$175
$0
You'll receive a discounted variable rate of 10.89% p.a.
Borrow over $30,000 and receive a discounted interest rate. No monthly fees and a redraw facility also available.
St.George Unsecured Personal Loan - Variable Rate
From 12.99% (variable)
14.06%
$2,000
1 to 7 years
$195
$12
You'll receive a variable rate between 12.99% p.a. and 18.9% p.a. based on your risk profile
A low minimum borrowing amount of $2,000 plus the convenience to make extra repayments and redraw them if you need them.

Compare up to 4 providers

Things to consider when applying

  • Avoid multiple applications. When you apply for a loan the creditor will list it on your credit file. Too many applications in a short space of time can have a negative impact on your credit rating.
  • Keep your record clean. You can make this happen by paying your debts on time and to defaulting on any loans. Keep track of your financials and don’t take on loans that you can’t handle to avoid defaults.
  • Check your credit report. You should keep monitoring your credit file and ensure the information is up to date. You need to take out outdated data, erroneous entry and other irrelevant information.

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Picture: Shutterstock

Related Posts

Personal Loan Offers

Important Information*
Logo for Harmoney Unsecured Personal Loan
Harmoney Unsecured Personal Loan

You'll receive a fixed rate between 6.99% p.a. and 28.69% p.a. based on your risk profile.
Apply for a loan up to $70,000 and repay your loan over 3 or 5 years terms.

Logo for NAB Personal Loan Unsecured Fixed
NAB Personal Loan Unsecured Fixed

You'll receive a fixed rate between 10.69% p.a. and 18.69% p.a. ( 11.58% p.a. to 19.53% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.

Logo for SocietyOne Unsecured Personal Loan
SocietyOne Unsecured Personal Loan

You'll receive a fixed rate between 7.5% p.a. and 20.49% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.

Logo for Pepper Money Unsecured Fixed Rate Personal Loan
Pepper Money Unsecured Fixed Rate Personal Loan

You'll receive a fixed rate between 8.95% p.a. and 16.95% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Make additional repayments or pay off the loan early, penalty-free.

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