Reasons for refusing a loan
A basic prerequisite for applying for a loan is an unrestricted legal capacity, which is associated with the age of majority. If you as the applicant have not yet reached the age of 18, a loan application is usually rejected.
Exceeding the maximum age
Not only the age of majority is an important requirement. Credit institutions also set an upper age limit, which is usually between 60 and 70 years. In retirement age, there is an increasing risk that it will no longer be possible to repay the loan in its entirety. In addition, the residual debt insurance ends at the age of 65. A loan is then often only granted with sufficient collateral or with a guarantor.
Income too low
Income plays another important role. First of all, it must, of course, be high enough to be able to repay the credit installments after deducting all other expenses. Furthermore, your income must be permanently drawn. Income below the garnishment exemption limit usually leads to the loan application being rejected.
Your employment contract is unlimited, but you are still in the trial period? Then this can be a reason for rejection. Because during the trial period, the employment relationship can be terminated at any time with a rather short notice period. Then, of course, there is a risk that the loan can no longer be repaid.
Fixed-term employment contract
If your employment contract is only temporary, the bank initially assumes that you will be unemployed afterward and therefore have only low income. It is assumed that these are not sufficient to repay the installments. This uncertainty can lead to rejection.
Since wage replacement benefits, which include sickness and parental allowance, unemployment benefit 1 and unemployment benefit II, are not attachable, loans are usually rejected when they are drawn. Only a few credit institutions make an exception here.
Low Schufa score
Again and again, it is reported that a bad Schufa score leads to loan refusals. Schufa itself regularly reports that only negative entries lead to a reduction in the score, but this is not always the case. Even with a permanent employment relationship, a sufficiently high income and without negative entries, you can be “credit unworthy” according to the score.
The exact factors that influence the Schufa score are still unknown. It is likely that frequent changes of residence and generally the residential area, frequent borrowing regardless of payment behavior and many credit inquiries also contribute to the fact that the Schufa score drops.
Negative Schufa entries
Negative characteristics in the Schufa always lead to rejection – except for loans without a Schufa query. Typical negative entries are outstanding loans, reminders and enforcement orders, affidavits and warrants. You cannot do anything against authorized entries, but you should have unauthorized entries deleted. Once a year, you are entitled to free access to your Schufa.
Bookings from debt collection agencies
If collection processes are not evident in your self-disclosure, the bank will find the corresponding bookings on your account statement at the latest. The bank must then assume that, at least in the past, you have not met your payment obligations. This is classified as a risk and a loan rejection can occur.
Overdraft on overdraft facility
Should you regularly use up or even overdraw your overdraft facility, the bank will assume that you will not be able to pay the monthly installments and will not approve the loan. Banks sometimes make an exception here if the overdraft facility is to be used to make up for the loan or several loans are to be rescheduled. In this case, the bank concludes that you want to get your financial problems under control.
If you do not specify further charges such as installment loans or leasing contracts, but these can be seen in bank statements or Schufa, this can lead to rejection if you have reached your maximum debt with the existing payments. When filling in the self-disclosure, you should generally be honest. False information not only leads to a loan refusal, but it also makes you punishable.