The reason your personal loan application gets rejected – Private sector employees

May 29, 2021 by AmwalCom

If you work in one of the private sector companies in Jordan and you receive your monthly salary through your bank, you might consider getting a personal loan from a bank. However, the process is not as simple. You might be surprised to know that you might get your application rejected for any of the following reasons:

1-      Credit Report

This could be the main reason your application gets rejected. The first step banks take is checking your credit report on CRIF Jordan. If there has been a falter in your credit report, you have little to no chances to get your loan application approved by the bank.
You can get a free copy of your credit report from CRIF Jordan once a year.

2-      Net Salary

To get a personal loan in Jordan, your salary should be higher than the minimum salary required by the bank. For example, if the minimum salary required is 500 JDs and your salary is 400 JDs, you will most probably get your application rejected.

3-      Salary Transfer

All banks in Jordan ask that your salary gets transferred to them before getting a loan from any of them. If you cannot transfer your salary to the bank you are applying for, your application will most probably get rejected even if you have a good credit report or a good salary above the required.

4-      Accredited Company

Banks in Jordan have a list of accredited companies. If your company is not among the listed ones, then you might be asked for any of the below extra collaterals to get your application approved:

• A salary higher than other employees working for accredited companies
• A higher interest rate
  
• A shorter financing period
  

You can ask the intended department in your company about the banks your company is accredited in. You can also apply to get your company accredited by the bank.

5-      Debt Burden Ratio

This is the ratio that indicates how much of your salary is deducted for financial commitments. It is usually around 50%, meaning that a maximum of 50% of your salary should go for your financial commitments.
For example, if you have a salary of 500 JDs, the maximum monthly amount that can be deducted from your salary is 250 JDs. If we assume you have an existing commitment for 100 JDs/month, then the bank can give you a loan with a maximum monthly payment of 150 JDs. The maximum loan amount you can get is calculated based on this. Accordingly, if you are asking for a larger loan amount, your application will be rejected.

6-      Service period and social security statement

Banks usually ask for a minimum of a 6-month experience in the company you are working for before applying for a loan. Therefore, banks will be asking you to provide a bank statement and a social security statement for the past six months.

7-      Loan Amount

If you are asking for a loan amount that is higher than what can be given to you, then you will get your application rejected. This is usually calculated based on a banking formula with the interest rate, financing period, salary, exiting commitments and DBR factored in.

If you think you are eligible for a personal loan, you can compare between personal loan offers here