If you have applied for financing from your house bank or an online bank , the loan may be rejected for various reasons. As uncomfortable as it is, there is nothing to worry about. There are solutions to the reasons for refusing a loan as well as alternatives to financing. Often there are even unjustified reasons such as a wrong Schufa entry.
There are different reasons for a loan being declined
One of the most common reasons for a refusal of funding is a fixed-term contract. This means that your financial future is not secured, which can lead a bank to refuse the loan. The level of your salary does not matter.
The same applies if you are still in the trial period for a new job. Here, too, there is a risk for the bank that you will not be able to make repayments on a regular basis if you do not maintain the permanent employment contract. One solution here is if you wait some time with the financing until you have a corresponding service contract and regular income is secured.
Pay attention to the bank statements
If your loan is declined, it may be worth taking a look at your bank statement. Because here can be reasons for rejection of a loan. Do you have for example
- too little income
- little monthly financial surplus
- Returns from direct debit orders
All of this affects the bank's confidence that you can make your repayments on a regular basis. For financial institutions, return debits in particular are a signal of poor payment behavior. The same applies to an obvious overdraft facility that you have already used on your salary account. Like several other current loans, these offer reasons for rejecting a loan, which puts your financial situation under additional pressure.
Pay attention to creditworthiness and age
If a loan is declined, this can of course also have something to do with your negative credit rating. This or the corresponding score expresses the probability with which you will meet your payment obligations. The higher this is, the better your creditworthiness is assessed. A bad Schufa score , however, means that your new loan will be rejected . The same may be true of your age. Because the probability of whether there will be a default or not also depends on it.
What to do if the loan is declined
If your loan application is rejected at the bank, you should find out what the reason was. In any case, you should first stay calm and examine the circumstances carefully. An unauthorized negative Schufa entry may be the trigger for the rejection. You can easily have this Schufa entry corrected . Of course, you can also simply contact another financial institution with your loan request. If you basically have a regular economic life, there is a chance that you will receive a so-called loan without Schufa from another bank.
Alternatives if the loan has been declined
If your loan is refused, you should always talk to the bank. Maybe there is the possibility that with the support of a surety or the use of collateral such as a life insurance or a property, you will still get a commitment. If the loan is rejected because an internal bank scoring is negative for you, you have the option of obtaining a loan from another institute. Because you should know that every bank creates its own credit scoring very individually. Even if you urgently need the additional money, you shouldn't go to any number of financial institutions and apply for a loan there. Because every such loan request can have a negative effect on your Schufa , which in turn increases the possibility that your loan will be rejected again.
Put on a loan without Schufa
An alternative, which must be assessed with great caution, is a so-called Schufa-free loan. This is mostly granted by foreign banks such as the Swiss loan . This has to do with the fact that German financial institutions are obliged to have their economic data checked by Schufa. If your loan is rejected and you choose this alternative, you should carefully examine the terms of the financing. You have to expect that the interest rates are significantly higher than with normal loans. Apart from that, there is a risk that you will catch a dubious provider.
Private credit as an alternative
One option that is becoming increasingly popular in the financial sector is private credit financing. You can register your concerns on the relevant portals and look for investors for your financial support. When a private person contacts you to help you with a financial loan, it is important to negotiate favorable terms and to put everything in a contract.
The pawn shop is also a possible way out
If your loan is declined and you need a smaller amount immediately, a pawnbrokerage of a valuable item, such as jewelry or your car, can be an alternative to financing. The value of the pledged item is assessed and paid out to you. You then have three months to repay the borrowed money including the taxes and to redeem the item.
This is what you should do in the event of a loan denial
If you have applied for a loan and it has been declined, you shouldn't let it get you down. Ask about the reasons for the rejection. The bank is obliged to inform you of the reason for the rejection. If it is an unjustified reason such as a wrong Schufa entry, you should definitely have it corrected. If, on the other hand, you have a bad credit rating but a steady income, a Schufa-free loan can be the solution to your problem. Look around for alternatives.
My name is Lutz Hegner. As managing director of Hegner & Möller GmbH, I have been dealing with the topic of FINANCES every day since 1991 and am fortunate to be able to combine interests and work. I am happy to pass on my expertise on the Best Credit blog and am available to answer questions about finance.