- Inadequate collateral value – One of the most common reasons for loan rejection is due to the inadequacy of collateral. Banks reject loan application if the collateral’s value does not meet its minimum requirements. If the collateral’s value is less than the loan amount, it may not be accepted as security. If a student requires an education loan of INR `40 Lakh. And when bank evaluates the value of the collateral to be INR 30 Lakh. In this condition the bank will not accept his collateral as security. Due to this reason student’s loan application will be rejected.
- Unacceptable collateral type – Lenders generally DO NOT accept the following immovable properties:
-Agricultural land
– Open land without boundaries
-In Telangana: Notary registered property
-In Karnataka: B Khata property
– In Delhi: GPA or leasehold properties
- Poor academic performance – Banks and lenders reject loan applications of the students who have poor academic performance. If the percentage of student in 10th, 12th or graduation is lower than 40%, then your loan application will be rejected.
- Incomplete documentation -Proper and complete documentation is mandatory for an education loan with collateral. If proper documents for education loan are missing, incomplete, the bank will reject the application. Make sure that all paperwork, including property titles, appraisals, and income verification are 100% complete before submitting the loan application.
- Low cibil score-If the student has a poor credit history or no credit history at all, it is a major concern for the bank.Low CIBIL score is one of the major reasons for the student loan rejection by the banks, because it indicates that you have not repaid your previous loans.