{"id":18207,"date":"2020-12-08T19:00:00","date_gmt":"2020-12-08T11:00:00","guid":{"rendered":"https:\/\/www.comparehero.my\/blog\/uncategorized\/loan-application-factors-banks-consider-when-reviewing-loan-application.html"},"modified":"2026-03-26T16:02:05","modified_gmt":"2026-03-26T08:02:05","slug":"loan-application-factors-banks-consider-when-reviewing-loan-application","status":"publish","type":"post","link":"https:\/\/www.comparehero.my\/blog\/loans\/loan-application-factors-banks-consider-when-reviewing-loan-application.html","title":{"rendered":"How to Get Your Loan Approved: 8 Factors Banks Look At When Lending You Money"},"content":{"rendered":"\n

Are you planning to apply for a loan for the first time? There are some important factors that banks consider before they approve your loan application. It can be a car loan, mortgage, or personal loan, but these 8 factors will help determine your chance of getting approved. Read below to learn more.<\/strong><\/p>\n

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Ever applied for a loan thinking that you\u2019re an instant shoo-in, only to be turned down by the bank? Loan rejections happen all the time, and in most cases, it\u2019s because applicants don\u2019t prepare themselves well enough before they make an application.<\/p>\n

Whether you\u2019re planning to take up a home loan, car loan, personal loan, or even a credit card, remember that banks must first assess your creditworthiness before deciding whether to lend you that sweet bucket of money or not.<\/p>\n

So, what do banks look for when you apply for a loan? Here are some of the factors that are likely to be considered:<\/p>\n

1. Income and employment history<\/h2>\n

You\u2019d obviously know that banks won\u2019t lend you money if you don\u2019t have an income. But did you know that it\u2019s more important to banks that you have a steady employment history instead of a high income?<\/strong><\/p>\n

Alex who earns only RM5,000 but has been with the same company for three years may look more attractive when compared to Bakri, who has just gotten a pay raise of RM10,000 in his new job of two months.<\/p>\n

Regardless, don\u2019t forget to support your loan application with the relevant documents such as your pay slips, EPF statements, bank books, and anything else that the bank requires. Also, don\u2019t try to forge them – doing so can get you in serious trouble.<\/p>\n

2. Existing liabilities \/ Debt servicing ratio<\/h2>\n

As part of your loan qualifications and loan assessment, banks will also consider how much debt obligations or liabilities you have so that they can gauge your repayment capability.<\/strong> The higher your obligations, the lesser your chance of getting your loan approved.<\/p>\n

While it may be tempting to hide your existing owing to the bank, a representative can easily find all these out by checking your credit score.<\/p>\n

Poor debt servicing ratio (or debt-to-income ratio) is one of the most common reasons for loan rejections<\/strong>, so if you\u2019re thinking about getting a loan, you may want to consider improving this first.<\/p>\n

To calculate, use this formula: (Total Monthly Commitments \u00f7 Total Monthly Income)%<\/strong><\/p>\n

Let\u2019s make an example of Matthew with the following details.<\/p>\n