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 is no way of knowing whether you will be approved for a personal loan. Not only that, but credit reporters keep a record of every rejected personal loan application on your credit file. Receive just one rejection and the next lender may see this as a red flag, which can 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 you can avoid the rejection pile. Read on to find out how to prevent your personal loan being rejected.

Harmoney Unsecured Personal Loan

Harmoney Unsecured Personal Loan


6.99 % p.a.


  • Borrow from $2,000
  • 100% online
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Harmoney Unsecured Personal Loan

Apply today to get approved within minutes for up to $70,000.

  • Max. loan amount: $70,000
  • Loan term: Up to 60 months
  • Turnaround time: 99% of approved online applications funded in 24 hours
  • Fees: Establishment fee of $200 for loans from $2,000-$5,000 and $450 for loans from $5,000-$70,000
  • No early repayment fees
  • Personalised interest rates based on your circumstances
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The most common reasons personal loans aren’t approved

  • You have a bad credit history. While all “bad credit” is usually pooled into one, there are varying levels. For example, you may never have defaulted on any loan or credit card payment, but you could 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 won’t approve your application if your income can’t sustain the monthly repayments. Lenders usually have a minimum income you need to earn to be eligible for a loan, so check if there is one set. If not, work out what repayments you need to make and if they are manageable on your income.
  • Dubious loan purpose. Check you can finance what you need to with the loan. Many loans come with restrictions as to how the funds are used. For example, secured loans can only be secured by certain assets, and car loans usually have an age restriction on the vehicle you are purchasing. Also, if your lender finds out your loan purpose isn’t credible, your chance of rejection is quite high.
  • Incorrect details. Lenders 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. Some lenders insist you should have a stable job and have finished your trial period. Otherwise, they will reject your loan. Trial period times may differ, but lenders usually require three months of payslips or six months for casual employees.
  • You hold too many loans. If you currently have several loans, this could give a lender cause to reject you.
  • The low value of secured assets. Lenders may 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 loans are rejected, so how do you avoid these?

  • Check the credit requirements. You should check what credit rating your lender requires, and then see if you meet them. If you’re required to have good credit, it usually means you can’t have 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, you can 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 change depending on the loan product you are considering. The minimum incomes are listed on review pages, so 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 want to take out a secured personal loan there will be more restrictions, although you may find limitations with other types of loans.
  • Verify your details. Double-check your details and information before you submit your application so the lender has no reason to reject your application. Is your application filled out entirely? Have you provided all the correct information? If this is not complete, it may lead to a rejected application.
  • 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? Check what the lender requires of your employment and ensure you meet it.
  • Don’t hold more loans than you can afford. In short, lenders want to lend you money. The main reason they won’t is if you have a number of loans already and they don’t think you can pay them back. You could look at consolidating your loans or paying back some of them before applying for a new one.
  • Check your collateral is sufficient. See what your lender requires regarding collateral and check that the asset you plan to use meets their requirements. If you are in doubt, get in touch with the lender before you apply.

Personal loan comparison

Now you know what to look for when comparing personal loans, check out the range of loans below. Once you have done so, you can continue reading to find out what not to do.

Updated December 6th, 2019
Name Product Interest Rate (p.a.) Min. Loan Amount Max. Loan Amount Loan Term Monthly Service Fee Application Fee
6.99% - 29.99%
Up to 60 months
$200-$450 depending on loan size
Apply for an unsecured personal loan up to $70,000 with no early repayment fees. Eligibility: Be a NZ resident/citizen and have a good credit score.
3 or 5 years
$250-$1,450 depending on the amount borrowed
A secured personal loan from $2,000 to $200,000 with repayment instalment options. Eligibility: Be an 18+ NZ permanent resident, earn $30,000 or more, have a good credit history and collateral/security.
9.15% - 22.95%
Up to 7 years
An unsecured personal loan up to $25,000 with personalised repayment options. Eligibility: Be an 18+ permanent NZ resident or non-resident on a working visa, earn $500+ weekly.
8.90% - 20.95%
Up to 7 years
A secured personal loan up to $50,000 with personalised repayment options. Eligibility: Be an 18+ permanent NZ resident or non-resident on a working visa, earn $500+ weekly.
13.95% - 23.95%
Up to 60 months
$125-$595 depending on loan size
A secured loan from $1,000 to $50,000 with a quick online application process. Eligibility: Be an 18+ permanent NZ resident, have collateral/security, earn at least $450 per week.
9.95% - 23.95%
Up to 60 months
$95-$595 depending on loan size
Borrow up to $20,000 and apply online within 5 minutes. Eligibility: Be over 21, hold permanent NZ residency, have collateral/security, earn at least $450 per week.

Compare up to 4 providers

Things to consider when applying

  • Avoid multiple applications. When you apply for a loan the creditor lists the application on your credit file. Numerous applications made in a short timespan can have a negative impact on your credit rating.
  • Keep your record clean. You can achieve this by paying your debts on time and not defaulting on any loans. Keep track of your financial obligations and don’t take on loans you can’t afford.
  • Check your credit report. You should regularly monitor your credit file to ensure the information is up to date. You need to take out outdated data, erroneous entries and other irrelevant information.

Picture: Shutterstock

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