Apart from your cash flow statements and your repayment capacity, banks may not be willing to hand over the loan amount you had asked for easily.
This is because, the lending institutions have a tie up with CIBIL (Credit Information Bureau of India), who keep a track of the individuals’ credit history, and supply the same information to the lending institutions like banks, NBFCs, housing finance companies etc.
So, if you have defaulted with a meager amount on your loan, which you might have taken even about 8-10 years back, will reflect in your credit report, making it difficult for your loan application to be processed.
Auto dealers, are witnessing a decline in the selling rate of 15-20%, since earlier, consumers were given the ability to buy their cars using a car loan but now it does not seem to be possible, projecting a decline in the loan applications of about 25-35% in case of small cars.
Real estate sector, is also feeling the pinch. Even with the presence of prospective home buyers in the market, there is a sharp decline in the demand for this industry because buyers are not able to get a home loan for financing their purchase easily.
However, it seems equally important on your part to keep a track of your credit history and try not to default on your loans or credit cards. The CIBIL report divides borrowers in to 2 aspects positive and negative, and it is the negative aspect that most banks use to process or decline the loan application. If you have defaulted then your name is on the negative list. But if you have a clean chit and a No-Due certificate from the bank, then your application will be considered.
It is equally important for you to remember that, If your application has been rejected due to a default on the loan which you have already settled, do not panic. CIBIL updates its reports only quarterly, so you can ask your report to be updated.