The Pre-approved loans are offered by the banks to an existing creditworthy customer, who is having a good credit score. This type of loan requires minimum or no documentation and short processing time as the bank is already aware of a borrower’s financial history. The customer can either have a salary account or savings account in a bank and should be a long-standing customer. With having a decent credit score, sufficient income, and an excellent repayment record, the pre-approved loan, such as personal loan can easily be availed. This type of loan comes with a fixed loan amount as the lender already sets the limit. The loan amount depends on the creditworthiness of a customer and can also be increased by negotiating with the lender.
The pre-approved loans are mostly unsecured, collateral-free short term loans that any individual with a decent credit score can avail from banks, NBFCs or fintech lenders. Some lenders pre-approve a loan to its customers even if they have no credit history based on parameters like income and savings history. It is often a limited period offer. You could check with your lender if you are pre-approved for a loan or not by logging into your net banking account. Do keep in mind the final approval depends on your credit history and the lending policies of your lender.
How to Apply for Pre-approved Loan?
A pre-approved loan can simply be applied online in just a few simple steps. Check with your bank if a pre-approved loan offer is available for you.
Step 1: You can log in to your net banking account to check if you are eligible for a pre-approved loan.
Step 2: Submit a duly-filled loan application form which can be obtained from the lender’s website, branch office, through SMS, or mobile app.
Step 3: Choose the required loan amount and suitable repayment tenure.
Step 4: The loan amount will be credited to your bank account after successful verification by the bank and your acceptance of the offer.
Eligibility Criteria for Pre-Approved Personal Loan
- One should be an existing customer of the bank
- Eligible customers must have a good credit history
- .Must have an excellent repayment record and a substantial savings history
Note: Customers with no credit history and repayment record are also eligible as long as they have significant savings in their account and a stable source of income.
Documents Required for Pre-Approved Personal Loan
In most of the cases, no documents are required as lenders already have the record of their existing customers. But some lenders do ask to submit a few KYC documents mentioned below.
- ID Proof: Aadhaar Card, PAN Card, Driving License, etc.
- Address Proof: Utility Bills, Voter ID Card, Aadhaar Card, etc.
- Income Proof: Salary slips of the last 3 months, Bank account statement, Form 16, ITR, etc.
Features and Benefits of Pre-approved Personal Loan
Instant Funds: Being eligible for pre-approved loans makes it a safety net for when you need urgent funding to meet your financial needs. The loan will be approved and disbursed on the same day within a few minutes once the verification process is successful. You can use the loan amount for any personal purpose.
Competitive Interest Rates: You are eligible for an instant loan offer if you have a good credit history. Your clean repayment record indicates financial discipline; hence, the lender will offer the loan at a competitive interest rate as you don’t fall under the lender-risk/credit-risk category.
Flexible Loan Tenure: You can choose a loan repayment period that is suitable for you. It usually ranges between 12 and 60 months. Consider your repayment capability when selecting the loan tenure so that you don’t default on loan repayment.
Minimum to Nil Documentation: Existing customers who are eligible for instant loans need not worry about documentation as the bank will have your KYC, bank, and income details in their database.
Paperless Loan Application Process: Most lenders offer online loan facility wherein you can apply for a pre-approved loan through their website or mobile app by filling up and submitting an online form. Soft copies of the necessary documents can be uploaded in the required format to the website or mobile app of the lender.
Negotiation Power: In a pre-approved loan, the bank is approaching you with a product, instead you request for a loan. It means that you are in a position to negotiate the terms of the loan with your bank manager or relationship manager and bring down the interest rate or increase the tenure or repayment term. If you are making an online application, however, this advantage would not be available as there is no human intervention.
Special Discounts: To lure you into taking a pre-approved personal loan, the bank may also add small benefits such as processing fee waiver, lower interest rate than that for regular customers, EMI holidays for 1-3 months, etc. If you really need a loan, these perks will help to reduce your overall estimated debt slightly.
Points to remember
- Maintain a high credit score, a good credit history, an excellent repayment record, a stable source of income, and substantial savings in your bank account to get a pre-approved loan.
- Such loans may be available for a specified period only. herefore, check with your lender.
- Don’t forget to go through the terms and conditions of such loans with your lender, especially the applicable fees and charges.
- Before applying for the instant loan, do a bit of research. Compare available features and interest rates of other loan offers with your pre-approved loan offer and choose the one that best suits your needs.
Frequently Asked Questions (FAQs)
Q.What is the evaluation process for a pre-approved personal loan?
A.Lenders check your credit score, credit history, bank balance, and income details. If you have a high credit score, a good credit history, an excellent repayment record, stable income, and sound savings in your bank account, then you are eligible for a pre-approved loan.
Q.I have a pre-approved loan offer. Should I opt for it?
A.Before applying for any type of loan, it is important to consider your financial needs. Only if you are in urgent need of funding, you should opt for a pre-approved loan. It is better to be debt-free. You can save the money that will otherwise be used to repay the loan in EMIs each month. The availability of quick funding doesn’t necessarily mean you should go for it if there is no immediate need. On the other hand, if you can afford to repay the loan on time, then you can opt for an instant loan with suitable and beneficial features.
Q.What are the differences between personal loans and pre-approved personal loans?
A.Personal loans and pre-approved loans are usually short-term credits that require no security or collateral. The difference being, pre-approved loans are an invitation to apply for quick funding while personal loan applications can be approved or rejected by the lender.
Q.Does a pre-approved loan offer mean guaranteed loan approval?
A. Pre-approved loan offers do not mean that your loan application will be approved for sure. Your loan request, although “pre-approved”, can be rejected by the lender if your credit score is low or if you do not meet an eligibility requirement during the verification process.