Many people have gotten their loan declined due to affordability scores in South africa. Your affordability to be able to repay the loan is mostly used to determine if your loan request can be approved or not in South africa.
Apart from that, another reason why your loan request is declined is because of your creditworthiness score (Credit Score). Creditworthiness and loan affordability are two vital pieces of information your lenders would like to check before granting you loans.
Bringing more light into the topic, Your possibility of repaying the loan is determined by your creditworthiness, whilst an affordability assessment determines if you can afford the loan.
So how can you go about it if you need a loan but are being refused everywhere in South africa? The simplest answer is to review your loan application to check what you’re doing wrong or what’s hindering you from getting approval
While reviewing your loan application, look at your credit score, affordability score, and make sure you’re not in debt, as well as adding any other relevant information. All of this can help you boost and improve your chances of getting a loan.
Now to make your loan request approval successful, I’ll be showing you the best alternatives to get funds if you need a loan but keep getting declined in South Africa.
But before then, let’s quickly get to expanciate the notable reasons your loan request is declined in south africa.
Why do my loans keep getting declined
Below are 8 possible reasons why you may have been declined for a personal loan in South africa.
1. You have a low credit score
Your credit score could be one of the reasons why your loan request can be refused in South africa. What most people don’t know is that the credit score determines everything about your loan approval.
Your credit score is heavily influenced by factors such as your payment history, the amount owed, and how quickly you pay your loans.
Does loan rejection affect credit score? No, it doesn’t. Getting rejected for a loan doesn’t impact your credit scores but hard inquiries like declined loans can stay on your credit file for up to five years before they are removed from your history.
If the borrower does not accompany the loan payment arrangements, the respective information will be sent to the credit history bureau and the debt may be transferred to a collection agency.
And eventually, you default the payment date, your credit score ( Trust Score) would significantly be reduced until gradually flagged.
The credit score in the table below is rated from good to bad and this also validates how guaranteed your loan approval would be rated.
|650 – 700||Good|
|634 – 649||Average|
|618 – 633||Below Average|
|Below 618||Very poor|
In South Africa, the credit bureau is in charge of the credit scores. They keep every detail about the monetary aspect of all eligible individuals in the country.
So, if you’re being declined a loan request any time you applied for one, you can review your credit score through either the My Credit Check or My Credit Expert portals. The My Credit Check portal, which is available at www.mycreditcheck.co.za.
2. Loan declined due to affordability south africa
Your affordability score is another reason why your loan can be declined in South africa.
An affordability score is a measure of an average person’s ability to get a particular loan amount in a particular region. This rating system informs and educates on income and expenses for a particular Borrower and the loan they are seeking.
Here’s another thing you should do if your lender rejects your loan application because of your affordability score:
- Review your location – Check for how advanced your area is, are there good jobs, companies and more.
- Review your job type – No one would grant you a loan of R2000 if you are a trader, kindly request for what you can afford to pay back in the given period of time.
3. You tried to borrow too much
Another reason why your bank won’t give you a loan might be because you request too much loan than your ability to repay.
A lender may deny your request for a personal loan if you borrow more than you can afford to repay. This is due to the fact that the amount approved by the lender is based on your income and other debt obligations according to the Lending & Secured Finance Laws and Regulations South Africa.
4. Your income is insufficient or you are unemployed
Lenders may decide to check your income when you apply for a loan to determine whether you are employed or not, as well as whether you will be approved or not.
If they decide your income is insufficient for the amount you want to borrow, you would eventually get disapproved.
Also, if you’re unemployed, your income would appear to be unstable from month to month which can also affect your approval process.
For example, if you earn R400 a month and decide to borrow a loan of R100,000, your request would absolutely be denied because your capacity or ratio to return the money would be low.
5. You didn’t meet the basic requirements for loan approval
If you’re trying to apply for a 6 months loan, no credit check in South Africa, or any other personal loan, you would need to submit some basic requirements in order to gain approval.
If you’re unable to submit the requirements, especially your South African ID, Payslip and utility bill, you might not be considered a loan.
Some of the requirement that is being accepted in south africa includes;
- You must be at or over the working age of 18.
- You must be employed or self-employed (depending on the company granting you the loan)
- You must have a valid document such as your ID, Utility bill and more.
- You Should never be under debt review.
- You must be a citizen of South Africa
- And so on.
Different loan companies have their own requirements, you can check them out by reading their policies.
7. Your loan purpose didn’t meet the lender’s criteria
Applying for the wrong loan can make your lenders decline your request. Each lender has their own criteria which requires different minimum credit scores, usage of loan, loan limit and many more.
So the right step is to figure out the lender’s criteria for applying for their loan in South africa. Incases of a low credit score criteria, there are other lenders who grant personal loans for low credit scores in South Africa, and in fact without affordability checks.
8. You might be under debt review
If you keep being declined for a loan, you might be considered to be under debt restructuring (debt review) in South africa.
To solve this issue, you can talk with your debt counsellor about your wants and if he accepts, he’ll help you get the loan.
During debt restructuring, your Debt Counsellor negotiates with your creditors for lower repayment amounts or better repayment terms, lower interest rates, and a longer repayment period.
You will benefit from a reduced payment of up to 50%. This allows you to more effectively manage your daily living expenses.
So now that you know why you keep getting declined loans when you need it in South Africa, below is a simple step to improve your chances of getting a loan.
What to do when you keep getting denied for a loan?
How can you improve your chances of getting a loan? You can follow these steps to improve your chances of not being declined again in South africa.
1. Don’t apply for too much Loan
Don’t apply for too many loans if you want to get approved quickly. Apply for funds that can be paid back over time.
If your credit score is too low and you are requesting a large sum of money, you are unlikely to be approved.
2. Checkout Secured Loans (Apply for loans with collateral)
If you keep getting rejected or declined, I recommend getting a secured loan; loans with collateral are always approved.
If your collateral meets the loan requirements, you may be able to find a no credit check loan lender who will provide you with a loan with collateral.
3. Be sure to have a job and enough money to pay back the loan.
You should have a job in South Africa and be a long-term employee. Self-employed individuals may not always be accepted.
Some private lenders may also require a payment date as well as a minimum monthly income of R 2000.
4. Make a guarantor apply on your behalf.
One of the greatest ways to apply for bad credit loans in South Africa with assured approval is with a physical guarantor.
Most private lenders would demand a guarantee, which would speed up the approval procedure. Ensure that the guarantor you offer has a legitimate ID and a steady job.
5. Provide your identity and financial documents
In South Africa, you cannot apply for a loan without producing all of your relevant documentation. If you were to default on a loan, these documents would give creditors a way to get in touch with you.
Identity that you must submit includes:
- Contact details, such as full name, address, and social security number
- A driver’s licence or other acceptable form of identification
- Information about your loan, such as why you’re applying.
- Two recent bank statements from all bank accounts
- Pay stubs from recent jobs
- Utility bills or mortgage statements and more.
If all these documents are up to date and legal, then you’ll be considered and your loan would be processed.
What to do when you keep getting denied for a loan?
Where can i get a loan if i keep getting denied
There are lenders who would be ready to grant you personal loans in South Africa no matter what.
You can apply for another loan after being declined. These lenders would enable you to collect personal loans for low credit scores without affordability checks in South africa.
We have written tons of guides about them and they are basically for people who have been rejected a loan because they are having bad credit or being under debt review in South africa.
Although building your credit score and improving your Debt To Income Ratio would help you get out of debt review in the nearest future.
But incase of emergency, below is how you can get a personal loan with a bad credit score in South africa.
1. Apply for Lime Loans
Lime loans offer the best loans for bad credit in South africa. You can get a loan amount of R2100 for 91 days repayment schedule.
To be granted a loan,you must be over 16 years old and have a valid south african ID including your latest proof of income.
2. Apply for Loans Find service
With LoansFind, you can get a list of direct lenders that are always ready to grant you a loan even when you have been declined by your previous lenders.
It is one of the easiest loans to qualify for and and you can also qualify for loans up to R250,000 with a repayment plan of about 60 months and a competitive interest rate.
3. Apply for Supa Smart Loan
This lender offers you an opportunity to get a personal loan with very bad credit. Get personal loans of R1K – R200K in South Africa
Supa Smart loan is the easiest to qualify for although they are not a direct lender which makes it easier to get loan faster.
4. Apply for a No Credit Check loans
A no credit check loans are loans that don’t need the lender to do a hard credit check on your credit history before approving your loan request.
Even if your credit score is very low, you’ll still be granted a loan as soon as possible.
5. Apply for debt consolidation loan
Debt consolidation loans help you to merge your default loan together, in order to help you reduce the cost of paying back.
You have fewer payments and interest rates to be concerned about when you combine several outstanding debts into a single loan.
By decreasing your likelihood of making a late payment or missing a payment entirely, consolidation can also help your credit.
6. Apply for collateral loan
A collateral loan would increase your chances of getting approved. Your loan request would never be declined in South Africa as long as your collateral has the same value for the loan you’re trying to request for.
Frequently Asked Questions
Why do my loans keep getting declined
The main reason why your loan request are being declined are having a bad credit history or low credit score, having a high debt-to-income ratio, having a history of unstable employment, having an income that is too low for the loan amount requested, or not including critical documentation or information in your application.
What to do when you keep getting denied for a loan
The best step to take if you need a loan and keep getting declined in south africa is to make a review on your loan application. Make sure to also check for your credit score or you can contact your lender to ask why the request was declined.
Which 2 of these should you do if your lender rejects your loan application
Firstly, ask your lender why your loan request was declined, then secondly make changes to your application. This would improve your chances of getting approved.
How can you improve your chances of getting a loan
To improve your chances of getting approved for a loan request, don’t applied for too much loan that you wouldn’t be able to repay.
How long does a failed loan application stay on your credit report?
Getting rejected for a loan doesn’t impact your credit scores but hard inquiries like declined loans can stay on your credit file for up to five years before they are removed from your history.
Can you apply for another loan after being declined
Yes, you can apply for another loan even immediately after rejected but you can only do so to unregistered loan plartfom in south africa.
Need a loan but keep getting declined South Africa