Why Personal Loan Application May Be Turned Down for Those Living in Shared Accommodation

Why Personal Loan Application
May Be Turned Down for Those
Living in Shared Accommodation?
BThe shared accommodation is very popular among the young professionals
who are bachelors or living in different cities apart from their families. This
type of accommodation is not only pocket-friendly, but it also comes with many
other added advantages.
The notable advantage of residing in shared accommodations such as paying
guests or rented flats is the ease to move around. Change of job is very common
in the private sector jobs and along with every job change; one can relocate
easily when they live in shared accommodation. Though this is an advantage of
shared accommodation the same can turn into a disadvantage when it comes to
a personal loan.

How a Shared Accommodation Can Make Your Personal Loan Application
Get Rejected
Personal loans are the much popular among the young professionals as this type
of loan product is collateral free and multipurpose. The process of availing a
personal loan is even hassle-free. One can avail an online personal loan with
just a few clicks on the computer screen.
Though the processing of a personal loan seems to be a simpler one, in reality, it
is not as simple as it seems to the borrower. As personal loans are unsecured
loans, the lender has to be cautious enough while lending. The risk at the
lender’s end is always high as the loan is not backed by any securities. So the
chances of turning the loan into NPA are always high in personal loans.
Knowing the fact, a personal loan lender always checks the creditworthiness of
the applicant comprehensively. The lender assesses each and every aspect
meticulously so that they can assume the risk profile before sanctioning the
loan. If the lender feels that the risk profile of the loan applicant is high, either
they reject the loan application or impose a high rate of interest.
Why Accommodation of the Applicant is Checked?
One of the most important documents asked by the lender is the address proof.
The address of the lender has a vital role to play in sanctioning the loan. When
you are still in the first job after graduation and residing as paying guest or in
shared accommodation the lender may not approve your loan application.
Lenders generally don’t accept such applications assuming that the applicant
has to pay the rent for his accommodation while carrying other expenses too.
Lenders take such cases as the riskier ones thinking that one may be incapable
of paying off the loan on time.

Some other times, it may happen that someone else from your address has
defaulted the loan and the CIBIL has blacklisted your address. In such
scenarios, a loan application from the blacklisted address is likely to be rejected.
As your address is shared by many residents, you won’t be able to know the
credit history of all residents. But CIBIL records such cases and rejects any loan
application further from the same address.
On the other hand, if you earn a handsome salary, you are married and living in
the rented house for many years, the lender would consider such applications
and you will get the approval easily. Lenders generally take such applicants as
valued customers who are stable at job and residence even if the residence is a
rented one.
From the Lender’s Viewpoint
In India, PG accommodation or a shared accommodation is considered as a
temporary one. The lenders take a PG address for loan application with the
same perception. The instability of job or address makes the lending business
riskier hence they don’t extend a loan to the persons living in the shared
accommodation. The bachelors are prone to changing job for a quick hike in
their salary. This makes a negative impact on the lender and makes the lender
take it for granted that they will not make timely repayments.
How do the Lenders Decide your Creditworthiness?
It is true that a lender checks the accommodation of the loan applicant and they
are likely to reject loan applications it is from a shared accommodation. In such
scenarios, the lender asks the loan applicant to add a co-borrower so that the
loan can be sanctioned. If the co-borrower is a financially stable person and
totally eligible for the loan, banks do offer an approval of the loan.

Another way of checking the creditworthiness of the lender is by checking his
social media profile. The lenders go through the social media account of the
loan seeker to get an assumption on the personality of the loan seeker. They
check the LinkedIn profile to check the frequency of job changes. If the loan
applicant is found to be changing jobs frequently, the lender generally denies
the application.
Most of the online lenders offer loan to the customers based on their proprietary
risk-management algorithms, advanced data analytics, and other data sources.
As mentioned above, the social media profile is also checked simultaneously.
By checking all those aspects, the lender gets an idea of the borrower’s
spending, savings, and other financial habits. Depending on all the research on
the loan applicant, the final decision has been taken by the lender.
The Last Line
It is true that getting a loan while living in shared accommodation is difficult,
but no one can claim it to be impossible. If you have an excellent credit score,
you earn well or you have a good employment history, you can still get a loan.
One can even avail an NBFC personal loan instead of a bank’s personal loan as
the approval chances increase when you apply for a personal loan from an
NBFC.