Can You Be Denied an Installment Loan? (2024)

FAQs

Can You Be Denied an Installment Loan? ›

Too Much Debt

A poor credit history or low credit score can prevent you from getting approved for a personal loan. Too much monthly debt relative to your income—your debt-to-income ratio (DTI)—can lead to a lender rejecting your loan application.

The reasons for loan denial can vary based on your unique situation. Common factors that prevent you from getting a personal loan can include a low credit score, insufficient credit history, a high debt-to-income (DTI) ratio or requesting too much money.

Personal installment loans can be a flexible source of financing to help achieve your financial goals. These loans involve fixed monthly payments, are usually extended for a period of 12-60 months, and may not require collateral. To qualify for one, you'll need to have a strong credit history.

Credit score, income and debt-to-income ratio are the main factors lenders consider when reviewing applications. Paying down debts, increasing your income, applying with a co-signer or co-borrower and looking for lenders that specialize in loans within your credit band could increase your approval odds.

Getting a personal loan with a co-signer that has a strong credit score and a solid income can boost your application. Your co-signer – ideally, a family member or close friend – will apply alongside you, and you'll both be responsible for repayment of the loan.

Examples of installment loans include auto loans, mortgage loans, personal loans, and student loans. The advantages of installment loans include flexible terms and lower interest rates. The disadvantages of installment loans include the risk of default and loss of collateral.

Some of the easiest loans to get approved for if you have bad credit include payday loans, no-credit-check loans, and pawnshop loans. Before you apply for an emergency loan to obtain funds quickly, make sure you read the fine print so you know exactly what your costs will be.

This allows them to look at your history from the past seven years and see whether you've typically made payments on time. For a $30,000 loan, you'll typically need a credit score above 600 just to qualify or above 700 to get a competitive rate.

What is the easiest installment loan to get approved for? ›

An installment loan is a credit account that provides a lump sum to be paid off over time in equal monthly payments. Personal loans, auto loans, mortgages and student loans are all examples of installment loans.

Personal loans are best for one-time, set expenses. Personal lines of credit are best for projects or purchases that require flexibility. Both options offer lower average rates than credit cards for borrowers with good credit. Repayment terms depend on how much you borrow and the length of your term.

Applying for a loan will impact your credit rating. This is because the application involves a hard credit search. However, the search won't say if you were accepted or refused, so a loan rejection won't damage your credit score any more than an approval.

Credit damage

If your monthly payments are more than 30 days late, the lender may report the delinquent balance to the credit bureaus, which will drop your credit score by a few points. Most lenders will use your FICO score when looking at your credit health, and 35 percent of the score comprises your payment history.

There are many reasons your application might have been turned down. These include: a history of missed payments or possible fraudulent activity on your file. the lender deciding you wouldn't be able to repay.

A Personal Unsecured Installment Loan provides you access to the money you need without using your property as collateral. You receive funds in one lump sum and pay it off through monthly payments over a fixed term of your choosing.