‘Your loan for Rs.1,00,000 is approved. Contact your bank to avail of the offer!’
You may have come across such messages, emails, or app notifications several times. These messages are examples of pre-approved loan offers sent out by banks, NBFCs, or other financial institutions.
A general loan application starts with the borrower applying for the loan and submitting documents after which the documents are verified and the loan is disbursed.
However, in the case of pre-approved loans, the lenders offer a loan directly to a customer without any initiation from their end. Pre-approved loan offers may be extended by banks, or non-banking financial institutions, and they are invitations to apply for loans.
Once you act on the communication, you will have to submit documents and go through the KYC process. In most cases, you get these invitations because you are eligible for a loan.
Pre-approved loan offers can be for personal loans, home loans, vehicle loans, etc.
Now that you know ‘what is pre-approved personal loan’ let us look into how you can check such offers.
Different banks and NBFCs have different ways in which you can check your pre-approved personal loan offers. Once you come across a communication that is offering you a pre-approved personal loan, click on the link provided.
The link will take you to their website where you will be able to check the offer. Such offers are valid only for a certain time period, and you might be getting a lower interest rate or a higher quantum if you apply within that time.
Some banks and NBFCs might also have personalized offers that you will be able to see on your dashboard when you log in using your credentials.
Pre-approved personal loan offers are extended to customers who show a good credit history and have a good relationship with the bank. You may also need to have a certain amount in your bank account to be offered pre-approved loans.
Credit card companies also send invitations for pre-approved credit cards to their customers.
Pre-approved loan offers are often limited-period offers, so you would need to avail of them while they last.
While the eligibility criteria for pre-approved loans may vary from one lender to another, having an excellent credit history is mandatory. Lenders will only offer pre-approved loans to customers who have demonstrated a track record of repaying their loans on time.
A pre-approved loan of a certain amount will be offered to you based on your credit history and relationship with the lender. Here is what happens after you respond to a pre-approved personal loan offer -
The financial institution will get in touch with you and you will have to submit the required documents. However, the documentation requirement might be much lesser as compared to a regular loan application.
Your documents will be verified and your credit score and report will be reviewed.
If you fulfill the required criteria, the loan amount will be credited to your bank account.
Please note that receiving a pre-approved loan offer does not guarantee the loan. If there are any variations in your details such as a change in your in-hand salary or credit score, there are chances that the pre-approved loan offer will be withdrawn.
Pre-approved loans come with their own set of advantages. These include -
Since the lender would have had most of the necessary information, the borrower may not have to provide too many documents.
The processing and disbursal of the loan take very little time as the eligibility criteria are already established and checked by the lender before making the offer.
Pre-approved loans come with lower interest rates as these loans are offered only to creditworthy customers.
Pre-approved offers are sent only to a select few. So these offers are customized to suit the needs of the customers.
In case of a pre-approved offer, the bank or your lender approaches with a loan offer, instead of you approaching the lender. Thus, you may be able to negotiate some terms and conditions or even get your interest rate lowered.
While there are some advantages to a pre-approved loan offer, there are certain disadvantages as well. These include -
A ‘pre-approved personal loan without documents’ offer may tempt you to apply for a loan even when you don’t need one. This might lead to a financial burden in the future. Thus, you should be careful when responding to such offers and only apply for loans when you really need one.
While pre-approved loan interest rates are generally lower than regular interest rates, they can still be higher than the market rate. Therefore, you must check the interest rates of other banks and not blindly trust the offer that is presented to you.
As pre-approved loans are offered upfront by the bank, the conditions attached to the loan may favor the bank. So, it is important to check for all the terms and conditions of the loan before accepting the offer.
Even though the loan offer is pre-approved, your bank may eventually not disburse the loan if you do not meet any of the criteria or your credit score is not up to the mark.
Pre-approved personal loans are quite popular and used by lenders to disburse more loans. Additionally, it can also be advantageous to borrowers as the application process is much shorter and the interest rates are on the lower side as well.
However, even though you can get a pre-approved loan, you should be in a position to repay the same. Please take a look at all the terms and conditions attached and then decide based on your requirements and financial situation.
No, a pre-approved personal loan offer doesn’t guarantee a loan. You have to submit your documents and only once they are verified, the loan gets disbursed.
The amount and the interest rate offered for pre-approved loans may vary from bank to bank. Depending on these factors, and the tenure, the EMI also varies.
Just receiving an offer of a pre-approved loan doesn’t affect your credit score. But once you apply for the loan, and a hard inquiry is run, it will affect your credit score like any regular loan.
No, pre-approved doesn’t mean accepted. Banks offer pre-approved loans after collecting some information about you. But once you respond to such an offer, they run a thorough inquiry. Your loan gets accepted only if your information is validated.
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