There are many types of loans, such as personal loan, car loan, home loan etc. These types can also be divided into several parts, such as unsecured loans and secured loans and non-approved loans and pre-approved loans etc. All these types have their own importance. So through this article we are going to give you information about pre-approved loan.
Based on your credit report, pre-approved offers of loans are made by banks, which are called pre-approved loans. Banks offer pre-approved loans in various formats like pre-approved personal loan, home loan, car loan etc. However, it is usually offered to those who deal with the bank and whose repayment history is clear. Pre-approved loan offers are usually helpful when the customer is in dire need of credit. These loans take much less time to process than non-approved loans. This type of loan is very unlikely to be declined. Pre-approved loan offers also help customers understand how much money they can avail immediately and thus decide to borrow as per their need.
Who is eligible for a pre-approved personal loan?
Pre-approved loan offers are made by banks and credit institutions. These offers are made to the existing customers of banks and various aspects of the customers’ bank accounts are considered before they are offered. Sometimes banks offer a pre-approved loan to the customer by considering and evaluating certain factors such as cash income, salary account transactions or repayment trends of the credit card holder. However pre-approved loan offers are made for a limited period and the customer has to accept the offer within this period.
Eligibility for a pre-approved loan
- The borrower should be an existing customer of the bank.
- The repayment history of the customer should be good.
- The customer should have a good record of repaying debt and credit card bills.
- Individuals who have no credit history are also eligible for pre-approved offers, provided they have a consistent source of income or a good savings amount in their bank accounts.
Some salient features of pre-approved loans
Pre-approved loans quickly became popular among customers. If you are a regular customer of the bank, you will also be offered many such pre-approved offers by the bank. Let’s take a look at some of the key features of pre-approved loans –
- Quick disbursement of loan.
- Attractive interest rate.
- Minimum Documentation.
- Flexibility in use of funds.
- Repayment facility through easy EMI.
Do you need a pre-approved loan?
Before availing a pre-approved loan, you should consider whether you really need a loan or not. Sometimes people apply for such loans without any strong reason and need. Since these loans are useful and can prove to be beneficial, you should use such offers only when your financial situation is not right and you need money. Remember that you have to pay an additional charge on each loan, which is known as interest. So once you take a loan, you will have to repay the loan and bear the burden.
Benefits of Pre-Approved Personal Loans
- Being eligible for pre-approved offers whenever you need cash immediately, you are eligible for it. The loan is approved and issued within a day and the money can be used for any purpose.
- If you qualify for instant loan offers, then your credit score is also likely to be good. Thus banks offer you this type of loan at a low interest rate, as your repayment record is good.
- When you will need cash, you will not have to worry about extensive documentation. Pre-approved loans for existing customers are approved immediately, as banks already have KYC documents of the customers.
- Some banks also offer benefits such as reduction in processing fees, lower interest rate and EMI exemption for eligible customers. If you take advantage of these loans during a financial emergency, these additional benefits help reduce the overall cost of the loan.
Pre-approved personal loan losses
- Pre-approved loans are offered for a limited period only. Since these are special deals, you have to apply within the specified time to get the loan.
- These offers only indicate the eligibility of the loan and your application can also be rejected by the bank based on the documents and credit score. Banks are, therefore, not legally bound to approve pre-approved loans.
- The interest rate of such loans should be checked before accepting any proposal. Although banks make good offers on pre-approved loans, they can sometimes increase the interest rate if they are not satisfied with the credit rating.
- Be sure to check all fees associated with the loan before finalizing the loan. Some banks may charge processing fees or transaction fees for pre-approved loans.