Pre-approved Personal Loans are same as that of any other personal loan but what makes the difference is- its pre-approved nature. A pre-approved nature signifies that the loan is already approved to you, and you just need to apply for this and you will get the money without any hassle.
Pre-approved personal loans are basically promotional strategy by the banks to increase the sale of their products. Many of you might keep getting calls, text messages or e-mail from different banks stating that you are eligible for a pre-approved personal loan from that bank. This kind of message is also common and would have also popped up across ATMs after withdrawing cash from the kiosks. One may think that what is a pre-approved loan and how is this possible? But it is true that this kind of loan exist! And one can easily get it by responding to those texts and calls in the time when they need monetary support.
Understanding Pre-Approved Personal Loans
Let’s understand what are pre-approved personal loans? But to know this in a better way you should first know about a personal loan. Coming to a personal loan-It is an unsecured loan and multipurpose loan which can be availed from banks and financial institutions without much hassle. The unsecured nature means neither any collateral nor any security is required to against the loan.
One of the biggest advantages of a personal loan is that it can be availed and used for any purpose as per your personal needs. But generally, people prefer to avail it to get out of immediate financial crunch or to cover personal needs such as- home renovation, wedding expenses, or even to consolidate one’s debt, higher education and many more. Only your KYC documents is needed and its quick disbursal process has made it one of the most famous and preferred choice of loans among applicants. And pre-approved personal loans are taking this one step forward and making it easier for the people to avail.
Who is Eligible for it?
Pre-approved loans are offered to those who have clean credit history and records. Financial institution carries out an analysis of the customer’s credit score, credibility and financial standing of an individual. Based on this analysis, they offer Pre-approved personal loan to.
One’s credit score is only good as long as one is paying off dues and EMIs related to any loan or credit card on time. Individuals who have a good repayment history and a good CIBIL Score, then it is highly likely that one is eligible for a pre-approved personal loan.
However Pre-approved loans are not strictly limited only to personal loans. Nowadays banks also provide pre-approved loans for home, cars, and even against the credit card.
Why are Pre-approved Loans Offered?
Pre-approved Loans are promotional exercise which banks do to increase the sales of their loan products such as personal loan, auto loan or home loan.
Reasons Why One May Get Chosen as an Eligible Customer:
- The banks have checked your credit score and they found it good and hence send you the pre-approval text.
- The bank might have reviewed your credit history and noticed good bank balance and a good transaction rate.
- You may have taken a loan previously and made prompt and regular repayments.
- It is also possible that the bank might be monitoring your income and expenditure rates in comparison with your credit-worthiness.
The Advantages of a Pre-approved Personal Loan
Lower Interest Rate: Banks and financial institutions offer low interest rate on pre-approved loans as compared to general one. This is done generally to attract more and more customers. However, lenders are certain regarding the repayment of the loan as they have analysed the credit Score. In some cases, lenders can offer little concession to have more customers.
Better Negotiation Power to the Applicant: As the initiative for providing loan is taken by the Bank; here the customers gets the power to negotiate on interest rate and processing charges if any. The lender is aware the applicant is a valued customer and hence they never want to lose any. So here applicants get better opportunity to bargain for a better rate for their personal loan.
Quick Processing and Fast Disbursal: Personal loans are best known for their quick processing and fast disbursal and when it is a case of pre-approved personal loan it becomes instantaneous. Since the bank already has your details and hence your eligibility. With all the details already available with the bank, only few steps remain before the disbursal of the loan, which can be completed easily. As a result of all this the disbursal is very fast.
Points to Consider before Applying for Personal loan
- Repayment period of the loan is an important thing to consider before you say YES to a pre-approved loan. It is important that one should repay the loan in fixed period otherwise it can end up with paying more on penalties.
- Interest rate, with pre-approved loan customers gets an opportunity to negotiate. It is also important to compare the interest rate and other charges with other lenders too.
- Always check for the pre closure charges and pre-payment charges.
- Compare with APR i.e. Annual Percentage Rate
- Look for zero processing fees.
- We careful about the documents required. Even it is a pre-approved loan then also there are chances the application can get rejected with wrong documents or irrelevant documents.