Pre-approved loans are issued instantly to a limited number of consumers. There is minimal paperwork needed, and no collateral or security is required. For the fast lending facility, all you require is a solid credit history and payback history.
Numerous banks and non-banking financial institutions (NBFI) in India provide this kind of loan facility in an effort to boost loan product sales, address clients' urgent financial demands, and drastically cut down loan disbursal times. For pre-approved loans, the interest rate might range from 10.49% p.a. to 14% p.a. However, the interest rate may vary from bank to bank, so before applying for a personal loan, you should confirm it with the lender.
Lenders are interested in borrowers who are financially stable and have good credit since they are more likely to repay their loans on time and avoid defaulting. Therefore, banks contact such customers with pre-approved loan offers rather than waiting for financially sound borrowers to approach them for a loan.
Banks use pre-approved loans as a marketing strategy to promote and sell more of their lending products. You may be selected as an eligible client for a number of reasons, including the following:
- The bank could have run a credit check on you and determined that you were a good client.
- You could have previously gotten a loan from the bank and repaid it on time and on schedule.
- The bank may be keeping an eye on your income and spending patterns in relation to your credit worthiness.
- Your credit history with them may have been checked by the bank, which may have noted a healthy bank balance and transaction rate.
Pre-Approved loan Eligibility
- Customers that qualify must have a solid credit history.
- Should already be bank clients. Some banks also make loans to new clients.
- Must have a spotless record of debt repayment.
- Has a sizable amount of money in their account and a steady source of income.
Pre-approved Loan Features
- Lowest Processing Time: Since you already satisfy the requirements for the loan, there is minimal processing time involved. Your loan might be authorized and disbursed in a day once all the necessary information has been checked.
- No or minimal paperwork: Zero or little documentation is needed for loan approval because your financial situation and reliability have already been thoroughly examined before you are presented with a pre-approved loan offer.
- Lower Interest Rate: Since these loans are typically given to people with strong credit histories and a history of on-time payments, they are provided at competitive interest rates that are typically lower than those of personal loans.
- No Collateral or Security Needed: A pre-approved loan can be obtained without the need for any collateral or security.
- Flexibility in Payback: You may normally pick a repayment period of between 12 and 60 months for pre-approved loans, depending on your convenience.
Pre-Approved Loans Vs Regular Personal Loans
- For a loan that has already been pre-approved, the bank is aware of the applicant's eligibility. In contrast, the bank receives the loan application for a conventional loan before determining the applicant's eligibility.
- When you receive an offer for a pre-approved loan, the preliminary loan limit, interest rate, and fees are indeed disclosed, in contrast to ordinary personal loans where the loan amount is not known at the time of application.
- It relies on variables such as the applicant's age, credit score, and level of debt, among others. Your credit score is unaffected if you decline a pre-approved loan. But in personal loan, asking for more loans will have a little detrimental effect on your rating.
Advantages of Pre-Approved LoanBeing qualified for pre-approved loans gives them a safety net for when you want immediate financing to satisfy your financial obligations. Instant funds or rapid funding Once the verification procedure is complete, the loan will be approved and disbursed the same day within a few minutes. The loan amount may be used for any individual objective.
- Competitive interest rates: If your credit history is strong, you may be qualified for a fast loan offer. Your track record of on-time payments shows that you have good money management, so the lender will provide you a competitive interest rate because you don't pose a credit or lender risk.
- Flexible repay: Loan terms that are flexible allow you to select a repayment schedule that works for you. The typical range is 12 to 60 months. In order to avoid defaulting on loan payments, take your ability to repay into account while picking the loan duration.
- Paperless loan application process: Most lenders provide online lending facilities where you may fill out and submit an online form to apply for a pre-approved loan using their website or mobile app. The lender's website or mobile app accepts soft copies of the essential papers in the appropriate format.
- Faster processing: You won't be given a lot of scrutiny because you previously met the requirements for the loan. Your loan might be authorized and issued in a day if all of your paperwork is in order and your financial information is accurate.
- Leverage of negotiation: In a pre-approved loan, the bank will contact you with a product rather than you coming in with a request, giving them more negotiating leverage. This indicates that you are in a position to haggle over the loan's conditions with your bank manager or relationship manager in order to reduce the interest rate or lengthen the loan's lifespan or period of repayment. However, this benefit would not apply if you submitted your application online because there would be no human involvement.
- Special discounts: The bank may provide modest incentives like processing fee waivers, lower interest rates than those for normal clients. EMI for 1-3 months, etc. to entice you into obtaining a pre-approved personal loan. These benefits can assist to somewhat lowering your predicted overall debt if you truly require a loan.
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