Pre-approved loans are short-term loans that banks and NBFCs offer to specific customers. They ask for a few documents and don’t need any security or collateral. The loan’s interest rate changes based on the borrower’s background. The loan can be used for anything, but it is beneficial for paying for unexpected costs like losing your job, having a medical emergency, or something else you didn’t plan for.
Why was I selected for a pre-approval loan?
Your financial track records are authenticated and verified by your bank. If a prospective borrower’s creditworthiness is deemed acceptable for a loan, lenders may often give them the option of obtaining a pre-approved loan. Receiving this loan offer indicates that your creditworthiness has been evaluated positively. If you have a salary account with them, they will know how much you make and how much you spend each day. Other evaluation techniques include:
Credit score: Because of your excellent credit score, your bank may have declared you qualified for a pre-approved personal loan.
Transaction history: Your bank may have analyzed your transaction history with them and seen that you have a healthy bank balance and transaction rates. Customers with no credit history or history of paying back loans can also get pre-approved loans if they have a stable source of income and a lot of money in the bank.
Previous loans: You may be picked for a pre-approved loan offer if you have previously taken out loans from your bank and paid them back on time.
Keep this in mind. However, that pre-approval does not guarantee an offer. It’s just a guideline based on whether or not you can get a loan. Despite being “pre-approved,” your loan request may be denied if you do not fulfill all eligibility conditions during the verification procedure.
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What are the seven benefits of pre-approval loans?
Benefits of pre-approved loans include;
- Instant funding: Being pre-approved for a loan is a safety net for your urgent financial demands. Once the verification procedure is complete, such loans are commonly accepted and given within a few minutes and may be used for personal purposes. Because you have previously met the loan eligibility conditions and will not be subjected to extensive inspection, the verification procedure may be finished in less than a day.
- Flexible loan period: You have more significant input in determining the best loan payback time. This is generally between 12 and 60 months. Keep your repayment abilities in mind when deciding on a loan term so you don’t fall behind.
- Existing clients qualified for pre-approved loans do not need proof since the bank already has your KYC, bank, and other income information in their database. Specific financial organizations also provide new clients with loans. Bank statements (typically six months), last three months’ wage slips, PAN Card, and evidence of domicile (Driving License, Aadhaar Card, Passport, etc.) are necessary for such circumstances.
- Most lenders provide loan services online, and you may apply for a pre-approved personal loan using their mobile app or website by filling out and submitting a form. Soft copies of the needed papers can be sent to the lender’s website or mobile app in the correct format.
- More bargaining power: With pre-approved loans, the bank approaches you with their product rather than you strolling in with a request. This provides you more negotiating power with your bank manager to reduce the interest rate or lengthen the duration or payback period at your leisure. This benefit is lost if you apply for the loan online since there is no human interaction.
- Better financial planning: When you apply for a loan, you may not be aware of your loan eligibility and may wind up having your application refused. Pre-approved loans allow you to organize your budget better since you know precisely how much financing you are qualified for.
- Special discounts: To make the conditions of the pre-approved loan more appealing, your bank may provide incentives such as a waiver of processing fees, cheaper interest rates than for ordinary clients, EMI holidays, etc. These benefits of pre-approved loans might help you lower your total anticipated debt marginally.
How can I apply for a loan that has been pre-approved?
Applying for a pre-approved loan is an easy and painless process. Here are the following steps you must take:
- Check with your bank to see whether you qualify for a pre-approved loan offer. This information is available by phoning your branch or going onto your net banking account.
- Submit a completed application form from the lender’s mobile app, website, or branch office.
- Select the loan amount and payback duration that works best for you.
- Once the lender has adequately confirmed your information, the loan amount should be credited to your bank account.
