Pre-approved personal loans are instant loans offered to individuals based on creditworthiness, requiring fewer documents and faster processing. These loans usually have an interest rate of 10-15% and are primarily available to existing customers, although new customers may qualify in some cases
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A personal loan is a widely used financial tool that helps individuals meet their funding needs. It is preferred because it requires no collateral and can be utilized for multiple purposes. A pre-approved loan stands out as a special type of personal loan offered based on the borrower’s creditworthiness.
What is a pre-approved personal loan?
A pre-approved personal loan is provided instantly to selected individuals by various banks and NBFCs based on your creditworthiness and credit history. It is offered to existing customers in accordance with their repayment behaviour. When compared to a personal loan, a pre-approved personal loan is easier as it needs fewer documents, which makes the process of getting a loan faster. Banks and NBFCs usually offer an interest rate of around 10 to 15 per cent.
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Features of a pre-approved personal loan
- Minimal documentation: A pre-approved personal loan requires fewer documents than others, as the lender already has information on your creditworthiness.
- Loan amount: The loan amount the lender provides will typically depend on your creditworthiness and repayment history.
- Interest rate: Due to your good credit history, you may get your personal at a lower interest rate while opting for a pre-approved personal loan compared to a personal loan.
- Check other fees: Before taking out a personal loan, review all the fees and hidden charges. Some lenders may charge various fees, such as processing fees and EMI bounce charges.
Who is eligible for pre-approved personal loan?
Banks and NBFCs typically offer a pre-approved personal loan to their existing customers. However, in certain cases, they offer it to new customers as well. Banks consider the following factors before selecting a customer for a pre-approved personal loan.
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- High credit score
- Record of paying debt and loans on time.
- Good credit history
- Regular income source
How to get a pre-approved personal loan?
- Firstly, check with your bank about your eligibility for a loan.
- To check your eligibility, you can visit the bank branch or official website.
- If you are eligible, you can request a loan by filling out an application form on the bank’s website or mobile app or by physically visiting the branch.
- Select the amount and tenure of the loan.
- Submit the required documents such as ID proof, address proof, salary statements, and bank statements for at least 3 to 6 months.
- Upon submission of the required documents, the banks and NBFCs will verify the details.
Please note that the documents required may differ from bank to bank. Please check with your respective banks regarding the necessary documents.
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Why should you get pre-approved personal loan?
- Quick access: A pre-approved personal loan gives instant access to finances, which might be beneficial to get emergency funds.
- Flexible term: The tenure of a pre-approved personal loan is flexible
- Rapid processing: This type of loan is processed quickly as most customers already match the eligibility criteria.
- Interest rates: If you are eligible for a personal loan, it shows that you have a good history and are financially responsible, reducing the risk of credit. Hence, a lender may provide you with a loan at a better interest rate.
Disadvantages of pre-approved personal loan
Validity: A lender may approve this type of loan for a limited period. Hence, you must avail this loan as soon as it is approved.
Eligibility: Your eligibility to get a pre-approved personal loan is solely based on the lender’s discretion on the basis of your credit history. Banks may or may not provide this loan according to their will.
In conclusion, a pre-approved personal loan may help to finance your emergency financial needs. It is also a reward for maintaining a good credit score and making timely payments on loans. However, one must get a pre-approved loan according to their requirements rather than just eligibility.
