Loans: Amount eligible for reduces after early repayment. Why is it so

[Kross]

Normally, the amount that a person can get as loan after an early repayment of the previous loan is supposed to increase. But in this my friend's case, he was offered a lower amount of loan after he paid the previous loan very early.

What could be the reason for that?

 

[Min George]

As someone that works in the financial sector, I can say that the transaction level in your account reduced. And that is why that happened.

 

[eLdavis]

Am not sure why this happened though, maybe he should check his credit score? Though i think it would be best to contact the loan app directly and find out from them.

 

[King Belieal]

Am not sure why this happened though, maybe he should check his credit score? Though i think it would be best to contact the loan app directly and find out from them.

That is true. The person should contact the borrower to know why their credit score dropped. It obviously dropped.

 

[kit_hung]

This can happen for a number of reasons. First, the lender may have rules that are based not only on repayment speed but also on the person’s loan usage history or risk profile. Also, paying early may indicate that the person is not using a large loan well or the lender feels that there is no guarantee of high interest coming out, so they are offering a lower limit. It could also be a system policy or just an error in the account.

 

[Augusta]

Maybe your friend didn't follow the right thing or set down rules which must have brought such policy

 

[Fidelia]

I think it is the fact that they repaid too early that caused the next loan offer to drastically reduce.

 

[Min George]

It is a person's account that they use to determine the amount eligible for next loan. The person didn't have enough transaction volume in his or her account.