Pre-approved loans are instant loans disbursed by banks and NBFCs to select customers. They require minimum documentation and no collateral or security. The loan interest rate varies based on the borrower's profile. The loan can be availed for any reason and is very useful for meeting immediate expenses due to sudden job loss, medical emergencies, or any other unforeseen event.
Why was I chosen for a pre-approved loan?
Your bank authenticates and verifies your financial track records. If a potential borrower's creditworthiness is found to be eligible for a loan, lenders will often offer them the facility of availing of a pre-approved loan. Simply put, if you get this offer, it means that your creditworthiness has been assessed favorably. For example, the bank will have an idea about your income and your daily cash flow if you have a salary account with them. Other methods of assessment can include:
However, keep in mind that the pre-approval doesn't guarantee an offer. It is merely an indicator based on your eligibility to get a loan. Although "pre-approved," your loan request can be rejected by the lender if you do not meet all eligibility requirements during the verification process.
What are the benefits of pre-approved loans?
Pre-approved loans come with several benefits such as:
How do I apply for a pre-approved loan?
Applying for a pre-approved loan is a simple, straightforward procedure. Here are the steps you will have to take:
1. Check with your bank if you are eligible for a pre-approved loan offer. You can get this information by calling your branch or logging in to your net banking account.
2. Submit a duly-filled application form which can be obtained from the lender's mobile app, website, or branch office.
3. Choose the loan amount you require and a convenient repayment period.
4. The loan amount should be credited to your bank account once the lender has successfully verified your details.
Are there any disadvantages of pre-approved loans?
The loan offer is extended to you based on the assessment of your creditworthiness even if you do not yet require a loan. And since these offers are usually valid for only a limited period, the timing may not necessarily coincide with your requirement for a loan.
Before signing any loan deal with your bank, take a thorough look at all the fees and charges. Some banks may charge an additional processing fee on pre-approved loans or put in extra costs such as transaction fees or high penalties on foreclosures and partial pre-payments.
Although the perceived benefits of pre-approved personal loans are vast, there is no point in taking a loan if you do not require it. Go into debt only if you are really in need of money. Also, a pre-approved loan might not be the best option for your specific situation. For example, you may choose to opt for a credit line instead, where you can get final approval and still won't have to pay any interest until you actually use the money from your approved limit. If you must take up the loan, ensure that you take only the amount you need and not the amount that the bank is willing to give.
How magical was the day when you discovered your career path? After a lot of research, putting in so much hard work, late nights, your heart and soul, you have become what you are today.