Why Do Banks Reject So Many Loan Applications?

The lending industry is dominated by large banks, profit-oriented P2P platforms, and risky micro-financing platforms. In fact, around 32% percent of all mortgage loan applications in the USA was denied. What are the exact reasons people get rejected and where can they find alternative methods of taking loans?

Loan rejections – The most common reasons

It’s pretty hard to believe that most loans get rejected. Aren’t the banks designed to hand out loans and make a profit on the interest rates? Isn’t that how they operate? Well, technically yes, that’s one of their most significant sources of revenue, but there are new factors at play every year, which forces these entities to change their criteria on who gets rejected and who doesn’t.

The most common reasons nowadays are as follows:

  • Not enough collateral
  • Small loans aren’t profitable
  • No previous credit history
  • Very strict criteria

The state in which some economies are in 2019, does not allow banks to just hand out loans left right and center. If you apply for a loan, with criteria which used to be considered immaculate a decade ago, today you’d barely be hitting the average mark.

The banks learned their lesson when African Bank’s shares plummeted 60% due to unsupervised lending.

Thankfully, however, the lack of alternative methods is not a problem we face. For people facing these issues, AssetStream is in the center of it all with its innovative Blockchain platform.

Why should you use AssetStream?

Luvoyo Rani, who is a successful South African entrepreneur has had his loan application rejected by banks more time than he can count.

Although he had a perfect portfolio of criteria and a business idea full of potential, the fear with the banks after African Bank was too much. The barrier was raised too high.

For 14 years Luvoyo had to live in his office and do nothing but build his business, all due to the fact that he couldn’t get funding from the banks. Despite the adversity, he managed to push through and is now an owner of a large computer retail store.

Luvoyo’s story teaches us that no matter what criteria you may have today, they may be obsolete in the future, even if you have a great business plan. AssetStream tries to solve this issue, by delegating the decision not on profit, but on value.

The lenders on AssetStream’s platform make their own choices, whether or not they want to approve a borrower’s request. This eliminates corporate influence and politics on the platform, leading to a more accessible market.

All that personal loan applicants need to indicate is:

  • Age
  • Occupation
  • Salary Base
  • Credit line
  • Address
  • Personal Contact
  • Current Working Duration
  • Current Liabilities
  • At least 3 months bank statements
  • Notice of Assessment

Once these criteria are filled, the automatic matching process will begin.

Why waste time with banks?

As you can see, being approved for a loan with a bank is not guaranteed. As a matter of fact, even if the approval happens, the funds may take a few days to be credited to the borrower.

The AssetStream platform aims to cater to every single applicant possible, help them be noticed by lenders and be able to fund their projects. The inclusion of the Blockchain provides additional security, transaction speed, and convenience.

Even better! AssetStream fully supports small loans for SMEs that don’t come with bank-breaking interest rates!

Disclaimer: This is a guest article. The views, opinions and positions expressed within it are those of the author alone and do not represent those of Cryptopolitan. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.

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