Personal loan rejection reasons

A personal loan is a go-to loan for everyone, be it for a sudden vacation plan, wedding, purchasing something pricey or when in need of urgent cash. It is a form of an unsecured loan, i.e.,  no collateral is required for availing this loan. The interest rates on personal loans are calculated either on a flat rate basis or reducing balance method. Personal loan interest rates are comparatively high, mainly due to the fact that they are unsecured and involve risk to some extent, but the rates are relatively lower in UAE than compared to any other country.

There are many factors that make you go to a bank to borrow money, and so does the bank have many factors to say no to you.

Why your personal loan might get rejected in UAE?

Personal loans are sought after when there is short term requirement of cash, hence a rejection might come as an unwanted surprise. To avoid this, we must know and understand the following reasons which are usually the attributes based on which your personal loan application is adjudicated.

Employment status: Every bank will check your employment status and how stable it is before proceeding further with your loan application. If in case you have had ups and downs in your employment track record or unstable history then there are high chances of your loan application getting rejected.

Listed approved company: Banks also check if your company is listed on the approved list of companies. This is usually done to check if your employment/income is secured or not and how well is your company doing. Normally large companies are listed, and for listed company employees, it gets easier to avail a personal loan.

Minimum salary: This is one of the salient conditions for availing personal loan; every bank has their own fixed minimum salary requirement, your salary will also have an impact on your eligibility to avail personal loan of a certain amount.

Debt Burden Ratio: In the simplest term, Debt burden ratio is the impact of debts on your income or the cost of debt that you need to pay from your salary. According to the UAE central bank, the EMI should not cross 50%. In other words, you will not be given the loan if your DBR comes more than 50% of your salary. Calculate your DBR using DBR Calculator.  

Credit score: Banks can now acquire your credit report from Al Etihad Credit Bureau and find out your DBR as well as if you have ever defaulted on any payments and how many credit cards you have. These factors contribute significantly to your loan application processing and approval. The credit score is a three-digit score given to every individual. In UAE the credit score is evaluated between 300-900, the higher the score, the more likeliness of availing credit.

Age: The eligible age for a personal loan is 21 years, and the maximum is 65 years at maturity. If your age is not in the range, then your loan application would get rejected.

How can you avoid rejection of personal loan application in UAE?

  • The chances of getting a loan are higher if you are applying to a bank in which your company is listed on the approved list of companies.
  • Be clear about all the requirements and the details.
  • Provide all the required information. And verify it before submitting.
  • Know your credit history; Al Etihad Bureau provides the credit report for AED 100.
  • Clear all possible debts before applying.
  • Know your credit capacity and apply it.
  • Make sure you get all the information regarding the eligibility criteria, documentation, etc. beforehand and complete all formalities in the first go.

It takes seconds for an application to get rejected. Hence it is advisable that you do a thorough homework before applying for one. Be sure to compare all the available options and weigh them before applying for one.

Meet the author
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Hemanta Bijoy Kaushik is a personal finance writer. Discovering his love for writing, he has written a number of blogs on personal finances and other genres on various digital media platforms. He has completed his MBA from IMT and currently working at HDFC bank as Personal Banker. When he's not writing, you can find him exploring different cuisines and binge-watching TV series. Hemanta hopes to write a novel soon. You can check out his work on

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