What can I do if I need a loan but keep getting declined?

There are times when we are in financial need, and it can be extremely frustrating when our loans get rejected. This is especially worrying if the loan is for an urgent purpose, such as for a funeral or medical expenses.

Here, we explain why your loan applications are rejected and what you can do.

Possible reasons why your loan is rejected

1. You are unemployed

Banks or licensed money lenders bear a risk when it comes to recovering loans. Being unemployed means you may not have an income, which sends a signal that you may be unable to repay the loan. Hence, lenders would be hesitant to approve loans for the unemployed.

2. No Singapore residential address

It is required by law for all borrowers to be residing in Singapore when they apply for a loan. This is to ensure that if you default on your loan, lenders would be able to contact you and take any necessary legal action if required.

3. You are bankrupt or under DRS

It is highly likely that you will not qualify for a loan if you are bankrupt or under the Debt Repayment Scheme (DRS). Many financial institutions would wait for about 5 years after you are discharged from bankruptcy to consider your loan application.

4. You recently defaulted or are undergoing litigation

If you have defaulted on a loan recently or are under litigation for defaulting, most banks and money lenders would reject your loan application, as this means you have a high likelihood of defaulting on the loan you are currently applying for.

5. You have too many loans

Having too many loans that your salary cannot sustain may indicate that you may be unable to fully repay a new one.

What can you do if you need an urgent loan but keep getting declined?

1. Get alternative source of income

If you are not in full-time employment, you simply need to prove that you have an alternative source of income to get a loan from licensed money lenders.

Here are some examples of part-time, temporary and freelance work you can consider:

1. Taxi drivers (including Grab/Go-Jek drivers)
2. Delivery riders
3. Part-time admin staff
4. Freelance tuition teacher
5. Any ad-hoc jobs like sales staff or bartending.

Here are other examples of alternative sources of income you can get:

1. Rental income
2. CPF monthly payout for retirement account
3. Spousal maintenance
4. Shares dividends
5. Compensation from individuals or companies
6. Any other source of income which is consistent and can cover the loan repayment period in the coming months

2. Get a guarantor or co-signer

You can also get a guarantor or co-signer when applying for the loan. However, do note that this person will also be held responsible should you default on the loan. This may affect your relationship with this person, so it would be best to be honest about your financial situation with your guarantor or co-signer.

3. Get a secured loan

Secured loans require collateral (such as property, vehicles, etc), which makes the loan less risky for lenders. If you default on your loan, the lender has the right to seize your collateral.

4. Opt for government financial assistance schemes

In the event that you are struggling financially or bankrupt or under DRS, options are limited. Applying for government financial assistance such as ComCare can be a viable option.

5. Can’t get a bank loan? Apply for a loan with licensed money lenders

If you have a bad credit history or lack of constant source of income, you might find it tough to get a bank loan.

In such instances, you might still get your loan approved by licensed money lenders. This is because licensed money lenders have less stringent credit checks, but it also means that you may be charged a higher interest rate (due to the risk taken by lenders to grant you the loan).

However, if your situation is assessed to be too risky (such as not having a Singapore residential address or are bankrupt), money lenders may not approve your loan as well.

Note that if your loan is too easily approved or if the amount approved is higher than expected, it could be a scam by unlicensed money lenders. So do your due diligence to check if your lender is licensed before you apply.

Need an urgent loan but keep getting declined by other lenders?

At Prosper Credit, we will do our best to cater to your needs and come up with the best solutions to help. Reach out to us now.