Are you looking to get an instant loan? If yes, pre-approved personal loans might be your answer. These loans have less processing time and minimal documentation and allow zero collateral, making them convenient, quick, and hassle-free. In times of emergency, you can rely on pre-approved personal loans. They have gained popularity due to their swift disbursal and minimal documentation requirements. In this article, let’s dive into the ins and outs of pre-approved personal loans, their features, eligibility criteria, the difference between pre-approved loans and regular loans, tips to get pre-approved, and more. Let’s begin.
Table of Contents
What is a pre-approved personal loan?
Pre-approved line of credit have emerged as a convenient and attractive financing option for individuals seeking quick and hassle-free access to funds in dire need of funds for an emergency. Banks and NBFCs usually offer to their existing customers on the basis of certain factors like credit history, income, etc. Pre-approved loans are considered a promotional exercise by banks to increase the sales of their loan products. Let’s first look at the features of a pre-approved loan.
Features of pre-approved personal loans
- Less processing time: As you are already approved for the loan, the amount gets directly disbursed to your account in a short time (ranging from within minutes to a day) if you are already a customer of the bank or NBFC.
- Minimal documentation: The process of a pre-approved loan is considered hassle-free as it doesn’t require heavy documentation for approval.
- Varying loan amount: Depending on factors such as credit history and repayment record, the pre-approved loan amount varies.
- No collateral or security requirements: If you are getting an instant loan, you don’t need to provide any security or collateral.
- Fees and charges: The lenders levy certain fees and charges on customers during and after the loan disbursement process. For example, processing fees, EMI bounce charges, secure fees, penal interest, foreclosure charges, etc.
- Repayment: The process of repayment involves you paying the amount in Equated Monthly Instalments (EMIs) with options for an auto-debit facility in case you are an existing bank customer. The standard repayment tenure is 12 to 60 months, which you can choose at your convenience.
Eligibility for pre-approved personal loan
To become eligible for the pre-approved loan, you may need to fulfil the following criteria.
- The age limit is a minimum of 21 yrs up to 60 yrs.
- You must have a good credit history.
- The minimum monthly income must be a minimum of Rs. 25,000.
- You must have a good track record of repaying debts on time.
- You should be an existing customer of the bank. Some banks also consider new customers for pre-approved loans.
Differences between pre-approved and regular personal loans
| Points of difference | Pre-approved personal loans | Regular personal loans |
| Loan approval process | Instant approval for eligible customers | Standard loan application and approval process |
| Documentation | Minimal paperwork required | Comprehensive documentation needed |
| Collateral requirement | No collateral or security needed | Collateral may be required depending on the lender |
| Loan amount | Varies based on credit history and repayment record | Subject to credit assessment and approval |
| Repayment tenure | Flexible repayment options from 12 to 60 months | Standard repayment tenure determined by the lender |
| Interest rates | Competitive rates for customers with good credit history | Interest rates may vary based on creditworthiness |
| Processing time | Faster processing due to pre-approval status | Longer processing time for verification and approval |
| Negotiation power | Ability to negotiate loan terms and avail of special perks | Limited negotiation options for regular loan applicants |
| Additional benefits | Special discounts and perks may be offered | Fewer additional benefits compared to pre-approved loans |
Please note that the specifics of pre-approved and regular personal loans may vary depending on the lending institution and its policies.
Benefits of pre-approved personal loans
- Instant funds and minimum documentation: Less processing time and instant disbursement of funds are undoubtedly one of the top benefits of pre-approved loans. As the documentation process is minimum, the funds are disbursed to your account instantly, given that your verification is completed with all the necessary documentation and requirements.
- Paperless process: Many lenders offer an online pre-approved loan process, resulting in paperless documentation. You can apply for this facility via the lender’s website or mobile app and submit the form with the necessary documentation.
- Flexible loan tenure: The usual loan repayment period for instant loans is between 12 to 60 months, allowing you to pay at your convenience.
- Competitive interest rates: Pre-approved loans are usually offered to people with a good credit history. These profiles can be considered trustworthy as they don’t fall under the lender-risk/credit-risk category. As a result, the chances of getting a loan with lower interest rates increase.
Disadvantages of pre-approved personal loans
- Low validity: Pre-approved loans are a kind of exclusive deal which is usually valid for a few days. Upon loan approval, you must act fast to avail it, or you might end up losing it.
- Bank’s discretion: Though you are already considered eligible for pre-approved loans, it does not guarantee immediate approval and disbursement of funds. In case any discrepancy is found in your documentation or credit score, your application can get rejected.
How to apply for a pre-approved personal loan?
Now that you have understood the basics of a pre-approved loan, let’s look at a step-by-step process to apply for it.
Check for eligibility: Start the process by checking with your bank if you are eligible for a pre-approved loan. You can also check it online by logging in to your net banking account.
Submit the application and documents: If you are eligible, then you will need to fill out the application form, which you may get on the bank’s website, branch office, or mobile apps. Certain banks allow you to request it via SMS as well.
Select your preferences: At this stage, make sure you check the interest rate. Ensure it is according to your repayment plan. Further, choose the amount for your loan and a convenient tenure of repayment.
Wait for the approval: As the verification of your application gets completed, the loan amount will be transferred to your bank account.
Note that some banks and NBFCs may ask for additional documentation, such as your last three-month salary slip, employee ID card, bank account statements, KYC details (PAN and Aadhar), and employer details.
Tips to get a pre-approved personal loan
- A strong credit score is crucial for pre-approval. Pay bills on time, clear outstanding debts, and keep credit utilisation low.
- Link your bank account for regular bill payments to showcase financial responsibility and enhance eligibility with an auto-debit facility.
- If you have an existing loan, make sure that you have quick EMI payments to build a positive credit history.
- Having a long-standing relationship with a bank increases your chances of receiving pre-approved loan offers.
To conclude
Pre-approved personal loans offer a time-efficient and straightforward way to secure funds for various personal needs. With simplified application processes and faster approvals, these loans have become a preferred choice for many borrowers. However, it is essential to carefully evaluate the terms, interest rates, and repayment options before committing to a pre-approved loan. Further, responsible borrowing and thoughtful planning are paramount to ensure a smooth and fulfilling borrowing experience.
FAQs
What is the maximum limit on a pre-approved personal loan?
The maximum limit for pre-approved loans differs for each bank and NBFC. Certain banks, including HDFC Bank, SBI Bank, Axis Bank, and Bajaj Finserv, provide standardised pre-approved loan amounts of up to Rs. 25 lakh. Conversely, ICICI Bank offers a higher maximum limit of up to Rs. 50 lakh for pre-approved loans.
How can I use my pre-approved personal loan?
A pre-approved personal loan has a flexible end-usage. You can avail it to meet any financial need.
Does a pre-approved loan offer mean guaranteed loan approval?
No, your application can get rejected even if you are pre-approved for a loan. This can happen in case of incorrect information in documents or applications and not meeting the requirements during the verification process.
How do I know if I am pre-approved for a loan?
When you are pre-approved for a loan, you usually get an SMS, call or email from your bank. You can also check your eligibility online through the bank’s net banking or mobile app or offline by visiting the nearest branch. Alternatively, you can call the customer care number of the bank to know your eligibility.
Can I avail of a pre-approved loan anytime?
No, unlike regular personal loans, pre-approved loan offers are usually available for a specific period of time.
As an insatiable reader and learner, I’ve spent the last two years exploring the world of finance. With my creative mind and curious spirit, I love making complex finance topics easy and fun for everyone to understand. Join me on my journey as we navigate the world of finance together!
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