Quick decisions lead to quick loan rejections

Research from MoneyExpert.com shows that one third of personal loans can now be approved online. However, this means that the number of rejected applications is on the increase, says the financial comparison site. That’s because many people apply for loans online without seeking advice or checking their credit status. The research shows that 1.39 million people have had applications rejected in the last six months – making a turn down rate of 320 applications an hour.

While applicants can get a loan approved in minutes from 31 of the 89 loans on the market, rejection can be just as quick and this can affect the credit rating. Sean Gardner, Chief Executive of MoneyExpert.com, said: ‘Loan providers are getting tough so applicants shouldn’t assume that, just because the loan is available online, acceptance is automatic. The same rigorous rules apply however you request credit and if you’re rejected too often it’ll be your credit rating that suffers.’

MoneyExpert.com recommends that applicants use online credit profiling tools to find out which are the best products before making an application. This will cut down the chances of being rejected.  Sean Gardner added: ‘The worry is that people might be tempted to apply for more than one loan at a time as they know they’ll get their responses quickly on the internet. With providers refusing credit to 320 people every hour, there’s clearly a need for funds out there from people with less than perfect credit records.’

He pointed out that homeowner loans might be a competitive alternative to unsecured loans and that good research was especially important for those who were regularly refused credit. Advice is also available from Citizens Advice Bureau. Mr Gardner also said that it was important to weigh up whether it was more important to save time or to get accepted before applying for several online loans.