Pre-approved loans are extended up front by the lender, subject to eligibility requirements and associated terms and conditions. Under a pre-approved personal loan, financial institutions often know the borrower’s creditworthiness. They are aware of their credit score and salary, for example. However, they may still request papers such as an ITR return and the most recent evidence of income to verify the borrower’s ability to repay and current income status. A lender may provide you with a pre-approved loan that is either secured or unsecured. You may get an offer for a pre-approved house loan, auto loan, motorcycle loan, personal loan, etc.
Who receives the pre-qualified loan offer?
Possessors of bank accounts or borrowers with loan accounts and excellent creditworthiness are more likely to get a pre-approved personal loan offer. Some pre-approved offers have an expiration date and are time-sensitive. Individuals with a strong credit score, no loan default history, a high ITR-reported income, or a large bank balance are often awarded a pre-approved loan.
Difference between pre-approved loans and regular loans:
A pre-approved personal loan is approved by the lender; hence they are already aware of the applicant’s eligibility. In contrast, for a regular loan, the lender receives the loan application before determining the applicant’s eligibility for a conventional loan. When you get an offer for a pre-approved loan, the loan amount, interest rate, and fees are already revealed, but with traditional loans, the loan amount is unknown at the time of application. It relies on variables such as the applicant’s credit score, age, and current debt obligations. Not accepting a pre-approved loan does not affect your credit score. However, asking for additional loans will have a slightly negative influence on your credit score.
Checking pre-approved loan offers:
Typically, banks and financial institutions notify their clients by several channels, such as email, SMS, mobile/online banking platforms, etc., and the customer care team may even contact you. You may also visit the physical branch to see all your pre-approved offers in one location.
Advice before accepting loans:
It would be prudent only to accept pre-approved loans when necessary. Never take out a loan just because you are qualified and can get one quickly. Before obtaining the pre-approved offers, check the interest rate, period, fees, and related terms and circumstances with comparable loans from the same institution and other lenders. Accept the pre-approved loan only if it is similar to or better than the offer from another lender. Ensure that the request has originated from a reliable source, such as a bank or NBFC. Beware of con artists who may send you fraudulent loan proposals through SMS or email.
What characteristics define a pre-approved loan?
Following are the significant characteristics of a pre-approved loan:
It is a quick loan that is simple to get. Due to the minimal paperwork needs, the application procedure is hassle-free. Since lenders only provide this loan form to priority or established clients, they need the fewest documentation possible for approval.
As the name indicates, a pre-approved loan is a swiftly authorized financial instrument. Suppose you are a loyal client of a bank or NBFC. In that case, you may quickly get products such as a Bajaj finance personal loan, and the loan amount can be delivered to your bank account soon after approval.
Flexible repayment methods:
The loan is repaid using Equated Monthly Installments, or EMIs. An auto-debit option is available if you have an existing account with the bank or lender issuing the loan. Here, the EMI will be debited from your bank account automatically. Typically, loan payback terms vary from 12 to 60 months.
Individuals may be qualified to borrow varying amounts based on their net worth and credit history. The amount granted to a consumer also relies on several other variables, such as any existing debts.
Lenders charge consumers different fees during and after the loan’s disbursement, including security fees, processing penalties, punitive interest, foreclosure fees, EMI bounce fees, and collection fees. These costs may vary from lender to lender.
What advantages do pre-approved loans offer?
The several advantages of pre-approved personal loans include:
Pre-approved loans are an immediate mortgage product in which the funds are sent directly into the borrower’s bank account. If you are qualified, you may count on it to have rapid access to cash in times of financial need. When you apply for a Bajaj Finserv Personal Loan, you get the funds on the same day. Thus, the money may be used for any purpose.
The submission procedure is straightforward:
Banks and other financial institutions only provide pre-approved lending services to reputable clients. Consequently, the whole application procedure is streamlined. You need essential paperwork for approval. In contrast to traditional loans, the lenders do not need any collateral. After establishing yourself as a bank’s most reliable client, you will get all of these perks.
Rapid processing speed:
Once you are eligible and complete verification, the loan money is sent into your bank account within minutes. You will not be subjected to rigorous monitoring and may pick the loan term according to your financial situation. It varies between 12 and 60 months. Choose a time prudently based on your financial resources. This is one of the best advantages of pre-approved personal loans.