Loan approved

How to avoid your personal loan being rejected

Rates and Fees verified correct on March 27th, 2017

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

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.

Understand the "why": Common loan rejection reasons

  • You have bad credit history. While "bad credit" is usually pooled into one, there are varying levels of bad credit. For instance, you may have never defaulted on any loans or credit cards or made a late payment, but you've enquired for five loans in the past two months. Another example of bad credit is defaulting payments that occurred up to five years ago – these will still be listed on your file. Bad credit of all levels may lead to a personal loan rejection.
  • Insufficient income. The lender can’t approve your application if they find that your income won’t sustain your monthly repayments. Lenders generally also have a set minimum income you need to meet for the loan you're applying for.
  • 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 to 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 asset. Lots of lenders have restrictions around 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. To see where you stand in terms of credit, you can order a copy of your file online today.
  • 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 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 your provided any incorrect information? Any of these can lead to rejected 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.

What to consider when comparing personal loans

There are many factors you must consider when comparing personal loans to find the best option for you. You should take the following into consideration:

  • Interest rates.
    One of the most important things to consider when you compare loans is the interest rate, which may be fixed or variable.
  • Loan term.
    This is the length of time you have to repay your loan. Fixed rate loans usually have terms of between one and five years, with variable rate loans usually offering terms of between one and seven. Generally, the shorter the loan term the higher your repayments will be, but the less you will pay in interest over the life of your loan.
  • Fees.
    Each credit provider has its own fees and charges for their loans, and you may be charged ongoing fees as well as loan establishment costs. These can add considerably to the cost of your loan so should be looked into before you apply.
  • Secured or unsecured.
    A secured personal loan is tied to an asset which will be repossessed if you default, while an unsecured loan has no collateral. These loans are usually used for different purposes, so make sure you select the right type of loan for you.

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.

Rates last updated March 27th, 2017
Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Repayment
HSBC Personal Loan
A competitive fixed interest rate loan with the option to make extra repayments. Min. income $30,000
From 9.5% (fixed) 10.06% $5,000 1 to 5 years $150 Go to site More
Latitude Personal Loans (Unsecured)
An unsecured loan designed for multiple purposes – renovating, buying a car or travelling. Funds can be in your count in as little as 24 hours.
From 13.99% (fixed) 15.2% $3,000 2 to 7 years $250 (Loans under $4000 - $140) Go to site More
NOW FINANCE Personal Loans
Get rewarded with a low interest rate for your good credit history.
From 9.95% (fixed) 11.41% $4,000 1.5 to 7 years $395 (Based on $10,000) Go to site More
Citi Personal Loan Plus
Borrow up to $75,000 with this personal loan offer from Citi.
From 11.99% (variable) 12.77% $5,000 3 to 5 years $199 (monthly fees waived in the first year) Go to site More
ANZ Fixed Rate Personal Loan
A flexible loan option that lets you pay off your debt, buy a car, fix up your house or cover travel costs.
From 13.95% (fixed) 14.81% $5,000 1 to 7 years $150 Go to site More
MoneyPlace P2P Loan
Interest rates from 8.90% p.a to 17.25% p.a. Comp rates from 8.90% p.a to 19.01% p.a depending on your credit score.
From 8.9% (fixed) 8.9% $5,000 3 to 5 years 0% - 3.75% of loan amount Go to site More
SocietyOne Unsecured Personal Loan
Interest rates for a 3 year loan range from 7.88% p.a. to 25.49% p.a. Comparison rate from 9.9% p.a. to 26.74% p.a. depending on your credit score
From 7.88% (fixed) 9.9% $5,000 2 to 5 years 3% (of loan amount) Go to site More
St.George Get Set Loan Personal Loan
A revolving line of credit that lets you access your funds as and when you need to.
From 17% (variable) $5,000 $150 Go to site More
ANZ Variable Rate Personal Loan
A variable rate loan that lets you make and redraw additional repayments.
From 14.69% (variable) 15.55% $5,000 1 to 7 years $150 Go to site More
Blue Question Mark

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 and updating information in your credit file. You need to take out outdated data, erroneous entry and other irrelevant information.

Order a copy of your credit file

Was this content helpful to you? No  Yes

Related Posts

HSBC Personal Loan

A competitive fixed interest rate loan with the option to make extra repayments. Min. income $30,000

ANZ Variable Rate Personal Loan

A variable rate loan that lets you make and redraw additional repayments.

Latitude Personal Loan (Secured)

Can be used for whatever purpose: renovating, buying a car, booking a holiday. Funds can be in your account in as little as 24 hours.

NOW FINANCE Personal Loans

Get rewarded with a low interest rate for your good credit history.

Ask a Question

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the privacy policy, receive follow up emails related to and to create a user account where further replies to your questions will be sent.

Ask a question