What Can I Do if I Need a Loan But Keep Getting Rejected?

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

Here, we explain what might cause your loan applications to be rejected and what you can do to remedy the situation so you can maximise the chances of loan approval for your next loan application.

Possible reasons why your loans were rejected

1. You are unemployed

Banks or legal money lenders in Singapore bear 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

In Singapore, the law requires all borrowers to reside in a local address when applying 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 as 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 five 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 can 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 rejected?

1. Get an 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 driver and private hire driver, such as for Grab or Gojek)
2. Delivery rider
3. Part-time admin staff
4. Freelance tuition teacher
5. Any ad-hoc jobs like promoter, event helper, and service staff

Here are other examples of alternative sources of income you may be able to get:

1. Rental income
2. CPF monthly payout from retirement account
3. Spousal maintenance
4. Dividends from investments
5. Compensation from individuals or companies
6. Any other source of income that 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

If 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 if you need financial assistance and you happen to be from a lower-income household.

5. Consider applying for a loan from 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 want to consider getting a bad credit loan from licensed lenders instead. They have less stringent credit checks, but you might 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 being 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 loan scam by unlicensed money lenders. So, do your due diligence to check if your lender is licensed by reviewing MinLaw’s list of legal lenders before you apply for any loans.

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

At Prosper Credit, we offer fast cash loans that cater to your needs — even if you don’t have the best credit score. As an established Toa Payoh money lender, we strive to come up with the best loan solutions to help our customers.

Reach out to us now to discuss your loan needs.