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Your offer for a pre-approved personal loan of Rs. 3,00,000/- is waiting for you.Contact your branch today.All of us have received an sms, an email, even a call like this from our banks on multiple occasions. But, how often have we wondered what it is? Almost never.That’s why, this article is dedicated to the myth i.e a Pre-approved Personal Loan.
What is a Pre-Approved Personal Loan?
A Pre-approved Loan is a facility banks like to offer their customers who have a squeaky clean credit history, subject fulfilment of a few criteria. These loans usually allow the customer to get a loan with minimum documentation and maximum ease.
Features of a Pre-Approved Personal Loan
- Fast processing
- Simple application procedure
- Favourable interest rates
- Minimum/Zero paperwork
Pros of a Pre-Approved Personal Loan
Lower Interest Rate
Pre- approved loans come with a lower rate of interest. Since the bank has already checked your income, savings, current balance and repayment history, it is certain of your ability to pay the installments on time.
Quick Processing
Since the bank has indicated your eligibility amount and is aware of your track record, the time taken for this personal loan approval is much less than that of a regular one. The loan is disbursed almost as quickly as it was processed.
Minimum Documentation
Pre- approved loans are offered to existing customers and that is why minimum or no documentation is required.
Can Be Applied Online
When a pre- approved loan offer comes to you, you can apply for it online rather than having to go and visit the bank branch.
When does one get offered a Pre-Approved Personal Loan Offer
There are quite a few reasons why you bank considers you to be eligible for a pre-approved loan offer. Here are a few of them:
- You have a good Credit Score and credit history.
- You have been paying your loan/Credit Card dues with your bank religiously
- The bank checked your income and expenses and found you eligible
- The bank considers you to be a credit-worthy individual
- You have saved up a healthy amount in your Savings Account and your bank knows about it
How does one get a Pre-Approved Personal Loan?
Since pre-approved loan offers are usually made by banks with whom you already have a relationship with, they don’t require many/or no documents.
Keeping that in mind, it is always wise and advisable to keep the following handy:
- Salary slips – 3 months at least
- Bank statements
- ID proof
- Residence proof
- PAN card
Usage of a Pre-Approved Personal Loan
A Pre-Approved Personal Loan can be used for anything, or purpose you may want to use it for.
DISCLAIMER
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
FAQS - FREQUENTLY ASKED QUESTIONS
What is the eligibility for a pre-approved loan ?
Your credit score plays a crucial role in obtaining pre - approved loans. Before extending a pre-approved loan, lending organisations typically analyze borrowers based on their creditworthiness and financial background. This means that in order to assess whether you are a low-risk borrower, they will take into account your credit score, job situation, income, debt-to-income ratio, and other factors. You qualify for a pre-approved loan if you have a high credit score, an outstanding credit history, a track record of on-time payments, a steady source of income, and adequate savings in your bank account.
How long is a pre-approved loan valid ?
A pre-approved loan's validity period varies based on the lending institution and the kind of loan. A pre-approved loan offer typically has a limited validity term, usually lasting a few days to a few weeks.
When does a pre-approved personal loan gets rejected ?
Although pre-approved personal loans may appear to be a loan approval guarantee, they can still be denied during the official application procedure for a variety of reasons. Your pre - approved loan can be rejected due to changes in credit score, inaccurate information, change in employment status, high debt to income ratio, insufficient documentation, or in the event that a lender notices any suspicious or fraudulent behavior while reviewing an application.
What is a pre-approved credit limit ?
A lender or credit card company will give a borrower a pre-set credit limit without the borrower having to officially apply for credit. This is known as a pre-approved credit limit. In other words, the lender or issuer has already assessed the borrower's creditworthiness and financial background and decided that the borrower is qualified for a particular amount of credit.
Are there any fees for loans that have been pre-approved ?
Similar to personal loans, pre-approved loans could also be subject to additional costs and charges. Processing fees, advance fees, part-payment fees, and other similar charges are some frequent fees and charges related to preapproved personal loans. However, some lenders might provide specific customers with extra discounts and advantages, such as a processing charge waiver or an EMI holiday for a specified period of time.
Should a person accept a preapproved credit when it is offered
Before choosing to take out a loan, it's critical to assess your financial requirements. It is advisable to avoid taking on debt unless it is absolutely essential and to set aside funds that would otherwise be used to pay loan EMIs. If you don't have a dire need, you shouldn't immediately accept quick financing even if it is available.
Does pre-approval guarantee a personal loan
A personal loan pre-approval does not ensure that you will be granted the credit. Based on the data you give the lender, a pre-approval is an early evaluation of your creditworthiness and loan repaying capacity. If you satisfy the requirements of the lender, they might make you a pre-approved credit offer subject to a set of terms and conditions. Additionally, if there are any problems with the information you gave or if your financial situation shifts, they may withdraw the pre-approval offer. As a result, even though pre-approval can offer you a good idea of your eligibility for a personal loan, it does not ensure that you will be granted the loan.