6 Ways to Ensure Your Online Loan Application Isn't Rejected

Indonesia is a developing country with a financial literacy rate still below 50%, according to the National Survey on Financial Literacy and Inclusion (SNLIK) in 2022 conducted by the Financial Services Authority (OJK).

This has an impact on the high consumption rate of the population, which was reported at 121.7 according to a consumer survey conducted by Bank Indonesia in September 2023. On the other hand, the ability to manage finances is still minimal, with 60% of Gen Y and Z lacking emergency funds.

Emergency funds are important in case of monetary crises or job loss. The amount needed for emergency funds varies depending on each individual's needs. Typically, a safe emergency fund should cover at least three months' worth of living expenses. Considering that finding another job or starting a business takes time and a considerable amount of funds.

Due to the high consumption rate and the lack of emergency fund preparations, online loan businesses (commonly known as online loan platforms or "pinjol" in Indonesia) are increasingly rampant. At least 101 legal online loan platforms are registered and licensed by the OJK. The national loan value as of August 2023 has exceeded 20 trillion Indonesian rupiahs.

If you are interested in applying for an online loan, whether for business capital or personal needs, you need to pay attention to the following ways to apply for online loan funds so that you are better prepared from the start and the loan funds can be disbursed more easily.

1. Prepare All Required Documents

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Before applying for an online loan, you need to know this first method of applying for online loan funds to ensure that your loan application is fulfilled properly. Make sure you have prepared all the required documents to apply for an online loan, such as your National Identity Card (KTP), bank account number, Taxpayer Identification Number (NPWP), and pay slips.

This is important because borrowing a large amount of money needs to consider monthly income. In addition, legal online loan platforms registered with the OJK will conduct strict screenings and will not ask for private data such as PIN numbers or bank account passwords.

Be cautious of some online loan companies that only ask for a photo of your ID card and phone number. These could be illegal online loan platforms and may complicate your loan repayment process. Always ensure that the data requested by the online loan platform is not of a sensitive nature.

Preparing all these required documents is a very important way to apply for online loan funds that you should do at the beginning to facilitate the loan application process. Therefore, you don't need to delay the process because you have prepared everything in advance.

2. Meet the Application Requirements

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This next method of applying for online loan funds needs to be done while preparing the documents, which is to pay attention to all the requirements in detail. Sometimes, some online loan platforms require a minimum age of 21 to be eligible for a loan, with a maximum age of 60.

However, many online loan platforms only require the borrower to have an ID card. This means that even if you are 17 years old and have an ID card, you can still apply for a loan. As long as you are employed or have a guarantor with a stable income, such as parents, siblings, or guardians.

Your monthly income or that of your guarantor will determine the maximum loan amount eligibility. The higher your monthly income, the larger the loan amount you can apply for. Although some online loan companies provide leniency without requiring pay slips.

It is important to note that providing pay slips is crucial for the online loan process, especially for legal online loan platforms registered with the OJK. This document will represent your ability to repay the loan as a borrower and minimize the risk of default. Therefore, the loan provider will not suffer losses.

This second method of applying for online loan funds is sometimes overlooked, even though meeting the requirements and determining the documents you have prepared can determine whether your loan application will be processed or not.

3. Have a Good Credit History

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The next method of applying for online loan funds is to ensure that your credit history is in good standing. Credit history is a record of borrowing transactions made by the borrower, whether through online loan platforms or licensed banks supervised by the OJK. As a borrower, this is mandatory for you to do.

All your credit history is recorded in the Financial Information Services System (SLIK). Through this system, you can also check your credit score by accessing the website https://idebku.ojk.go.id.

If you have previously applied for credit or loans, and have successfully completed the repayment process, you should have a good credit history. Usually, online loan platforms will request your credit history, and the likelihood of your loan application being quickly approved is high.

Conversely, if there are problems with payment in your credit history, then the likelihood of your loan application being approved is low. Therefore, as much as possible, ensure that you always make loan repayments on time. Do not overlook this method of applying for online loan funds.

4. Match Your Domicile Location with the Service Area

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Some online loan providers are quite flexible in providing loans. Some online loan platforms provide services that can be accessed by all Indonesian citizens, regardless of their domicile location. However, some online loan platforms have limited services, applicable only in specific areas.

This method of applying for online loan funds will be much more effective if done according to the location of your residence. Therefore, you need to consider online loan providers that have full services according to your domicile. In case of emergencies, you can easily access the services without geographical restrictions.

In addition, selecting an online loan service provider that matches your domicile location can expedite the fund disbursement process. However, to avoid undesirable circumstances, you can choose more than one online loan provider as an alternative if you have difficulty getting approval from one company.

5. Ensure Your Phone Number Is Always Active

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Generally, online loan providers will verify your phone number before approving the loan. You need to ensure that the contact you register remains active throughout the loan repayment period. This will prevent disturbances from the loan provider to the contact number of your guarantor.

Ensuring that your contact number is always active is an important step as a good way to apply for online loan funds. This is because representatives of the online loan provider usually contact you by phone if you have not made a payment by the due date.

By activating your contact number, the online loan provider can easily reach you directly. Moreover, you can also provide a clear explanation of why you have not been able to make the payment by the due date.

By keeping your phone number active and providing a valid reason, the online loan provider will consider you as a borrower who complies with the rules. Nevertheless, credit completion is still a major consideration in providing loan funds. So, do not underestimate this method of applying for online loan funds.

6. Apply for a Loan According to Your Ability

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The last method of applying for online loan funds that is the most important and you need to pay attention to is to apply for a loan according to your ability. Online loan providers will assess whether an individual is eligible for a loan based on their ability to repay it.

Do not apply for a loan that you think could be too burdensome. Pay attention to the percentage with your monthly income. Even if your credit history is good, you should not force yourself to borrow funds with a nominal amount that is too high, especially exceeding your financial capabilities.

A high nominal amount can be a boomerang for you. Besides, online loan

 companies will question this, and you will also have trouble making payments every month. Calculate carefully before making a decision. Especially if the purpose of the loan application is purely for consumption.

On the other hand, if you have a small business (MSME) and need capital to develop your business, you are eligible to apply for funds up to the required amount. Applying for loan funds like this is productive. This means that the funds will be circulated to generate returns.

Good news for all business owners and culinary MSME owners, you can apply for business capital up to 500 million Indonesian rupiahs through ESB Capital. This is ESB's program to support culinary entrepreneurs in Indonesia to develop their businesses.

ESB will provide recommendations to partner banks or capital providers. However, to access this program, you need to subscribe to ESB products for at least 6 months and have a positive profit as a form of trust from the capital provider to your culinary business.

ESB Capital could be an online loan method for your business capital needs to try. Because it collaborates with credible, licensed, and OJK-supervised banks and capital providers.

Be careful before applying for loan funds. If you are going to do it, make sure the company is safe and guaranteed. Pay attention to the loan interest that you must pay along with the principal amount.