Personal loans can help people in financial distress get out of their debt quickly but have you ever heard of a pre-approved personal loan? Preapproved personal loan are essentially no-collateral loans made available to only select customers based on their credit history and relationship with the lender. Since the lender already knows the customer’s background and credit history, the pre-approved loan requires minimal documentation and is processed faster. When the loan is pre-approved, the process of obtaining a personal loan is even faster. But is it worth it to go for such a loan? Let’s understand the same through this blog below.
How Does One Qualify for a Pre-Approved Loan?
Have you ever wondered how your friend has received a notification of a pre-approved loan and you haven’t? It is natural for you to wonder how one qualifies for these types of loans.
Banks and other lending institutions typically send notifications to certain borrowers who have a good repayment history and a high credit score. Banks typically post such offers to their customers’ online accounts or mobile applications. Customers may also receive bank notifications about any offers for preapproved personal loan. If the need arises, the customer can check with the bank to see if a pre-approved loan offer is available on the account. If you have never missed or defaulted on an EMI or credit card payment, you may be eligible for pre-approved loans.
You can take a variety of effective steps to improve your chances of qualifying for Preapproved personal loan if you were’t diligent in the past with repayment tenure. Begin by repaying your existing loans on time and in full. Limit your credit utilization ratio and avoid taking out new loans until your existing debts are paid off.
A Step-by-Step Guide to Obtaining Pre-Approved Loans Online
The exact procedure may differ from one lending platform to the next. However, here’s the gist of how one can avail of a preapproved personal loan.
- Log in to the bank’s or lender’s website or their mobile application.
- Enter any additional information that may be required (like your name, PAN, date of birth, etc.)
- Check to see if you qualify for pre-approved loans.
- If you qualify, you can apply for the loan only if you require emergency funds.
- Fill out an online application form. Most of the time, no additional documentation is required because the lender has already checked your eligibility before pre-approving you.
- Fill out the online application form.
- The money will be credited to your account.
Benefits of Pre-Approved Personal Loans
Funding is available right away: Being pre-approved for a loan serves as a safety net for your pressing financial needs. Once the verification process is complete, such loans are usually approved and disbursed within a few minutes and can be used for any personal purpose. Since a customer has already met the loan eligibility criteria and will not be subjected to extensive scrutiny, the verification process can be completed in less than a day.
Flexible loan period: You have more say in determining the best loan repayment period for you. The personal tenure is usually between 12 and 60 months so when you are deciding on a loan term, keep your repayment ability in mind so you don’t fall behind.
Funds are disbursed immediately: The disbursal process is much shorter and simpler because the first step of verification is already completed by a lender. After the verification process is completed, the loan can be approved and disbursed on the same day. As a result, it is a viable option for obtaining funds in an emergency.
Doesn’t come with end usage: The pre-approved personal loan, like all personal loans, can be used for any personal purpose, giving the borrower the freedom to use it as needed. In contrast to other types of loans, such as a home loan or a car loan, the borrower is not required to disclose the purpose of the loan or the timeline for using the funds.
Borrowers can negotiate Interest Rates at Their Lowest: The lender will only offer a pre-approved personal loan if the customer has a good credit history and a credible record with the bank as they have more assurance that the borrower will repay the loan on time. As a result, the lender is likely to be willing to negotiate a favourable interest rate in order to secure the business.
Loan Terms: Preapproved personal loan typically have terms ranging from three to sixty months. This allows borrowers to assess their financial situation and choose a tenure that is more suitable for them in order to meet the loan repayment deadline.
Are there any drawbacks to pre-approved loans?
Even if you do not currently require a loan, the loan offer is extended to you based on an assessment of your creditworthiness. And, because these offers are usually only valid for a limited time, the timing may not always coincide with your need for a loan.
One should examine all personal loan processing fee and charges before signing any loan agreement with your bank. Some banks may impose an additional personal loan processing fee on pre-approved loans, as well as additional costs such as transaction fees or penalties for foreclosures and partial prepayments.
Better financial planning: When you apply for a loan, you may not be aware of your loan eligibility and may end up having your application rejected. Pre-approved loans allow you to better plan your finances because you know exactly how much funding you are eligible for.
Special discounts: To make the terms of the pre-approved loan more appealing, your bank may include benefits such as a waiver of personal loan processing fee, lower interest rates than for regular customers, EMI holidays, and so on. These benefits can help you reduce your total estimated debt slightly.
So we are saying,
Do you have a track record of timely repayment? The good news is that you could be eligible for a preapproved personal loan. A pre-approved personal loan is exactly what it sounds like the lender has already approved your eligibility to borrow funds from the bank before you even apply. Being eligible for pre-approved loans can be advantageous in a variety of ways. In the event of a financial emergency, you can obtain funds quickly without having to go through the hassle of extensive documentation and approval.