22 Views

5 Reasons Nigerian Banks Won’t Approve Your Loan Application

upload_2015-3-16_9-7-3.png

Banks are agents of financial intermediation. Through financial intermediation, bank collects money from the area of surplus (customers) as deposits, holds the money (fund) and transfers it to areas of deficit through loan while avoiding insolvency. From the above, it is obvious that banks perform two major functions which are acceptance of deposits and loan administration.

Since the advent of banks recapitalization in 2005, Nigerian banks have gone mega, as such, Nigerian banks are financially buoyant and are willing and are well positioned to avail loans to their customers (individuals and corporate organizations). However, granting of loans by banks requires that customers meet and exhibit certain conditions and characteristics without which their loan requests will not be granted.


Bad Credit History

One of such conditions or characteristics reflects on the character of the customers. Character is an important aspect of credit. It is tantamount to customers’ credit worthiness. A customer that has bad credit history by defaulting in loan repayments will not have his loan approved. Customer’s credit worthiness is carried out by credit bureaus like CRC Credit Bureau. Once a customer makes a loan application, the bank gets in touch with a Credit Bureau and the bureau checks the customer’s credit history with all the banks in Nigeria. If the customer has defaulted in any way in the past, the bureau will notify the bank. Receipt of unfavorable report from Credit Bureau means that such customer’s loan will not be approved so any customer that wants to obtain loan from any bank in Nigeria should make sure he has no record of loan default.

Low Collateral Value

Secondly, banks deny customers loan on the grounds of collateral. Collateral is a secondary source through which a loan can be repaid in case the primary repayment source can not repay the loan. Based on international banking standard, collateral has two values which are Open Market Value and Forced Sale Value. The Forced Sale Value is the auction value or amount of collateral and the bank operates based on that. Normal credit rule requires that the collateral’s Forced Sale Value be 150% of the loan amount. The meaning of this is that if a customer requests for a loan of NGN1m, the Forced Sale Value of the collateral pledged should not be less than NGN 1.5m. A customer may pledge collateral with an Open Market Value of NGN2.5m for a loan of NGN1m without knowing that the asset’s Forced Sale Value is NGN1.2m. In such case, the loan will never be granted. Any corporate customer that wants to apply for a bank loan should value its collateral and ensure that its Forced Sale Value complies with credit requirements.


Low Salary Value

In the case of an individual customer, a loan is denied if the monthly repayment amount is greater than 33.33% of the customer’s monthly salary. In view of the above, a prospective loan applicant should contact his bank to work out his repayment schedule in a bid to ensure that his monthly repayment is less than or equal to 33.33% of his salary before applying for any loan.

Incomplete documentation

Loans are denied if a customer does not sign across a postal stamp while executing the offer letter. As such, it is advisable that a customer affixes a NGN50 stamp and sign across the stamp while accepting the loan’s offer vide its offer letter.

Incomplete documentation leads to loan denial by Nigerian banks. As an applicant, make sure you provide the entire document stipulated in the offer letter. Also, note that the required documentation varies from one type of loan to another. It is better to consult your bank and have a look at the checklist in respect of your loan so as not to be caught unawares when the loan processing commences.

Viability of repayment sources

The viability of repayment sources goes a long way in determining whether a loan will be approved or not. For personal loan, applicants with no viable means of repayment like monthly salary, company income and so on will have their loan requests turned down. As a loan applicant, make sure you have a viable repayment source before making a loan request.

Get the best viral stories straight into your inbox!

Don't worry, we don't spam

Leave a Comment

Your email address will not be published.

Latest Posts

5 Quick And Stunning Facts About The Nigerian That Painted Obama’s Portrait
Best of Nigeria
30 views
Best of Nigeria
30 views

5 Quick And Stunning Facts About The Nigerian That Painted Obama’s Portrait

Mabel - October 21, 2017

The skilled craftsman who is a New York-based representation painter, known for his exceedingly naturalistic depictions of dark individuals in chivalrous postures, will be the main dark…

Eat These Common Foods And Lessen Your Risk Of Colon Cancer
Food and Health
34 views
Food and Health
34 views

Eat These Common Foods And Lessen Your Risk Of Colon Cancer

Mabel - October 21, 2017

You know entire grains are useful for your heart, yet they may have another advantage, as well, as indicated by a new report from the World Cancer Research…

SEE This Nollywood Director’s ‘Birthday Cake’ Everyone Is Talking About – [One Of A Kind]
Entertainment
37 views
Entertainment
37 views

SEE This Nollywood Director’s ‘Birthday Cake’ Everyone Is Talking About – [One Of A Kind]

MT - October 21, 2017

  Nollywood director, Ugezu J. Ugezu who is currently on set with his crew for the making of the movie ‘THRONE OF REVENGE’, celebrated his birthday with…

5 Drugs That Get Nigerians High Far More Than Marijuana
Food and Health
30 views
Food and Health
30 views

5 Drugs That Get Nigerians High Far More Than Marijuana

Mabel - October 21, 2017

  The codeine culture is getting more intensed in north and in urban ranges of Southern Nigeria. It is the most loved medication of decision for some…

Exquisite First Photos From Ex Governor, Mimiko’s Daughter’ Traditional Wedding In Akure
Politics
33 views
Politics
33 views

Exquisite First Photos From Ex Governor, Mimiko’s Daughter’ Traditional Wedding In Akure

MT - October 21, 2017

On Thursday 19th October, 2017, Ondo State’s former Governor Mimiko’s daughter, Bibitayo tied the knot with his sweet heart, Adetola Aderemi in the State’s capital, Akure. Dignitaries…

How Actor Mofe Duncan’s Sister Was Chased To The Point Of Death By FRSC Officials – Friend
Entertainment
23 views
Entertainment
23 views

How Actor Mofe Duncan’s Sister Was Chased To The Point Of Death By FRSC Officials – Friend

MT - October 21, 2017

  Nollywood actor, Mofe Duncan took to Instagram moments ago to narrate how his sister Matilda sustained injuries in an auto accident in Abuja. The accident, according…

Nigeria’s First Lady, Aisha Buhari Relaxes On A Yacht With Wives Of Other Leaders In Turkey (Photos)
Politics
31 views
Politics
31 views

Nigeria’s First Lady, Aisha Buhari Relaxes On A Yacht With Wives Of Other Leaders In Turkey (Photos)

MT - October 21, 2017

Nigeria’s First Lady, Mrs Aisha Buhari was seen with wives of other world leaders relaxing on a yacht in Instanbul while being hosted by the First Lady…

Quick Reminder Facts About ‘Legendary DaGrin’ As Fans Celebrate His 30th Posthumous Birthday
Buzz & Trends
22 views
Buzz & Trends
22 views

Quick Reminder Facts About ‘Legendary DaGrin’ As Fans Celebrate His 30th Posthumous Birthday

Mabel - October 21, 2017

Oladapo Olaitan Olaonipekun, also known as Dagrin (21 October 1987 – 22 April 2010), was an award-winning Nigerian rapper from Ogun, Nigeria. A film of his life…

Atiku’s Ex Daughter-in-law, Miss Ummi Reveals What Led To The Custody Battle With Ex Hubby Aminu
Politics
27 views
Politics
27 views

Atiku’s Ex Daughter-in-law, Miss Ummi Reveals What Led To The Custody Battle With Ex Hubby Aminu

MT - October 21, 2017

In an interview with Punch, Miss Ummi Bukar Bolori, ex wife of Aminu, one of the sons of the former vice president of Nigeria, Abubakar Atiku, reveals…

Kebbi State’s Accountant-General, Mohammed Dakingari, Sentenced To 70yrs Jail Term For This Reason.
Politics
29 views
Politics
29 views

Kebbi State’s Accountant-General, Mohammed Dakingari, Sentenced To 70yrs Jail Term For This Reason.

MT - October 21, 2017

The Court of Appeal Kebbi Division has upturned the judgment of a Kebbi State High Court which discharged and acquitted Mohammed Arzika Dakingari, Accountant General of Kebbi…

This Is What Governor Amosun Is Saying About The Stories Making Round That A Youth Corper Gave Birth To Twins For Him
Politics
38 views
Politics
38 views

This Is What Governor Amosun Is Saying About The Stories Making Round That A Youth Corper Gave Birth To Twins For Him

MT - October 21, 2017

Mr Ibikunle Amosun, the governor of Ogun State, on Friday morning broke his silence on what he considered as the avalanches of rumours and falsehood being peddled…

Bidemi Kosoko Shares Adorable Birthday Photos With Well Wishers
Buzz & Trends
26 views
Buzz & Trends
26 views

Bidemi Kosoko Shares Adorable Birthday Photos With Well Wishers

Mabel - October 21, 2017

Nollywood performing artist and girl of Veteran on-screen character Jide Kosoko, Bidemi Kosoko is a year more established today and the on-screen character has dropped some lovely…

Bishop Oyedepo Speaks On The Spiritual Attack On His Private Jet That Almost Killed Him Recently
Religion
35 views
Religion
35 views

Bishop Oyedepo Speaks On The Spiritual Attack On His Private Jet That Almost Killed Him Recently

MT - October 21, 2017

It was praise, worship and thanksgiving to God yesterday at Canaanland, Otta, the headquarters of the Living Faith Church Worldwide (LFCWW) . The leadership and members of…

PHOTOS: ‘I Wish My Mum Was Alive To See This’ – Davido Gushes As He Takes Photos With Oba Ewuare Of Benin
Entertainment
45 views
Entertainment
45 views

PHOTOS: ‘I Wish My Mum Was Alive To See This’ – Davido Gushes As He Takes Photos With Oba Ewuare Of Benin

MT - October 21, 2017

Nigerian music star, Davido earlier today was pictured with Edo Crown Prince for the first year anniversary of Oba Ewuare II of Benin Kingdom coronation today. The…

How This Nigerian Lady, Ekprimma Called Out An Uyo Doctor For Molesting Her Will Shock You
Shocking
21 views
Shocking
21 views

How This Nigerian Lady, Ekprimma Called Out An Uyo Doctor For Molesting Her Will Shock You

MT - October 21, 2017

An enraged Nigerian lady, Ekprimma Koko is set to go to Uyo on Sunday to probably show the whole world the man who molested her several times…

MBGN 2017 Winner, Ugochi Ihezue Super Excited As She Receives Her Official Car (Photos)
Entertainment
22 views
Entertainment
22 views

MBGN 2017 Winner, Ugochi Ihezue Super Excited As She Receives Her Official Car (Photos)

MT - October 21, 2017

Newly crowned Most Beautiful Girl in Nigeria, Ugochi Ihezue has received her official Car. The model who beat 35 contestants and walked home with the Crown got…

Former Militant Leader, Asari Dokubo Has This Strong Message For President Buhari (New Video)
Politics
27 views
Politics
27 views

Former Militant Leader, Asari Dokubo Has This Strong Message For President Buhari (New Video)

MT - October 21, 2017

Former Niger Delta militant leader, Asari Dokubo, has come for President Buhari again. In this new video, Dokubo described the President as a ''satan'' for neglecting people…

First Photos From Davido’s Friend, Tagbo Umeike Burial Ceremony. All Happened Amidst High Emotions In Anambra State.
Entertainment
48 views
Entertainment
48 views

First Photos From Davido’s Friend, Tagbo Umeike Burial Ceremony. All Happened Amidst High Emotions In Anambra State.

MT - October 21, 2017

Davido’s friend, Tagbo Ifeatuchukwu Umeike was laid to rest today  20th Oct.2017 at his home town Osumenyi in Nnewi south LGA.Anambra state. Friends and loved ones were…

Loading...