7 Factors That Determine Whether Your Loan Gets Sanctioned

  • Jan-04-2023

The bank brokers your application and makes an assessment of your credit score. Credit scores are based on the sum of your past credits and the sum of your past debts.

The bank will likewise look at how long it has been since you have had a loan in any capacity. The length of time that has past since you last had a loan will be taken into consideration by the bank when considering whether to offer you a new loan or not.

The day by day wage is likewise brought into consideration by the bank as it is one more point to consider when making their choice about whether or not to give you a loan or not. Furthermore, they will likewise check whether you are paying off any other loans that have been granted in your name.

A loan is generally given to individuals who have moderate earnings and solid financial records.

Work experience:

If you're looking to get a loan, then it's best to maintain a positive track record at your present workplace. The higher salary you get from a company, the better the chances for a bank loan. This can be especially true if you have served there for over 10 years and are qualified for a higher-level position. Banks also look at how long you have been with your present firm, so it would be best if you had worked there for at least six months before applying for loan.

Credit history

Banks require an applicant’s credit history before giving them an approval for any kind of financial assistance including home loans and car loans as well as other financial products like credit cards etc. The reason behind this is because if someone has several bad credit histories then it may be difficult for him/her to get. Your credit history is based on the settlement of your past loans. The credit score between 700 and 800 is positive. If your credit score is under 300, this will improve the probability of your application being rejected. Your income is also taken into consideration when calculating your credit score. If you have been having negative income for a long time and have not been able to pay off any of your loans, then this will increase the likelihood of rejection by a lender. The bank wants to know that you are capable of making payments on time and that you will continue doing so after getting approved for a loan.

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Your credit score is an indication of how much lenders trust you to pay back loans. The higher your score, the more likely you are to get approved for a mortgage loan or other loan product offered by Your scores range from 300 to 850, where 650 and below means that it's difficult for most lenders to approve you for a loan because their risk assessment indicates that you might not repay them in full when due.

There are three main components that go into calculating your Credit Score: payment history (70%), amount owed (30%), and length of time overdue (10%). The higher your total score above 650 means that you're less likely to default on bills in repayment compared with someone who has a lower total score above 550 or 500 respectively

Age of the Borrower

The age of the borrower is another thing that banks consider before considering a loan. If you are in your early 21s and have an income that is not much more than Rs.1 lakh per annum, then it would be difficult for you to get a loan. In such conditions, you can generally pursue loans with a more restricted range, which at any rate results in higher EMIs.

However, despite the fact that age is one factor considered by banks, it is not the only one in loan decision-making. Another significant factor is how much cash you can spare and what you will use it for. For instance, if you need to buy a new home and make improvements thereon, then banks will take into consideration your ability to pay off your loan on time.

In addition to these factors, various other factors are also taken into account when deciding about giving loans to borrowers of various ages:

Repayment Period

Repayment period offered by lenders are different in different products and is one of the factors that influence the loan approval. A shorter repayment period means that you have a chance of getting the loan approved by the bank. As the repayment time increases in five-year sections for secure loans – 10, 15, 20, and 25 years. In a nutshell, the repayment period is the amount of time you have to pay back your loan. It is an important factor in determining whether or not your application will be approved by your bank.

A shorter repayment period means a lower interest rate for you. Banks usually prefer applicants with longer repayment periods because it reduces their risk that you may not be able to repay the loan on time.

Margin money

Margin money factor is a calculation that shows how much of your secure loan like Home Loan, Mortgage Loan,etc can you afford to borrow if you put down 20%, 10% or 5%. The higher the margin money factor, the lower your mortgage interest rate. The main purpose of a down payment is to ensure that the borrower has sufficient equity in the property. The required amount depends on the lender and the type of loan. For a home loan, your down payment should be at least 10% of the total property cost. If you are planning to buy a house, then it is essential to have enough cash available to make a substantial down payment.


Income is one of the most essential things that banks consider before endorsing a home loan as it conveys how much you are making every month, your employment status, your expected salary and even your current financial status. Banks will see whether you have enough resources to pay back your loan on time or not as this will determine whether you can afford to pay back your loan or not.

Loan Amount

Your bank will dependably assume regardless of whether you want to raise anything greater than Rs 1 lakh or less than Rs 1 crore depending upon your qualification, sort of residence and where you desire to live in India or abroad and also on your profession and income source (if any).

You can apply for a home loan, but before that make sure to know these factors. The most significant factor is the applicant's capacity to pay back the EMIs. In case a person's income fluctuates, he needs to be extra mindful of this variable. The applicant should also be in a position to pay back his or her home loan EMIs on schedule. This implies that they ought not be able to fall into arrears at any point of time. In addition, they should likewise have enough assets to guarantee the repayment of their home loan EMIs.

Lastly, it is crucial for an applicant to have an established occupation and likewise have an excellent credit history. This implies that he/she ought to be able to offer proof of steady income as well as a dependable credit score rating record.