Pre-Approved Personal Loans are credit offers which are pro-actively proposed by banks and other financial institutions to their valued customers. The fact that you are being approached for a pre-approved Personal Loan is a reflection of your high credibility.
Creditworthy customers are the ones who maintain a healthy bank balance, have a regular source of income, hold attractive saving history or a good repayment record. So being creditworthy means, you are seen as a potential customer for bank loan products.
By identifying creditworthy customers and extending pre-approved loans, banks can generate good business with reliable customers. It is thus one of the key marketing strategies for lenders. Thus, they employ dedicated calling teams, send mailers, connect through text messages, and develop technology for sending prompts through kiosks and ATMs as promotional activities. These are means and tools of boosting the sale of loan products.
At the same time, locking in a preapproved Personal Loan can be one of the most hassle-free ways to avail a swift Personal Loan, particularly in times of emergency. In most cases, it may take up to 48 hours to get your loan disbursed from traditional lenders. New age lending products such as MoneyTap Loans though are approved swifter than a regular Personal Loan.
How does a bank pre-approve your loan?
- The bank tracks your Credit Score for some time.
- Your re-payment history with respect to a current or previous loan will boost your chances for a preapproved loan.
- The bank values repayment history of your Credit Card bills.
- The bank categorises you as a notable customer based on the quantum of transactions in your account and the bank balance held with them.
- Bank assesses the constant flow of income in your account.
Formalities to be complied with for loan disbursal
Pre-approved Personal Loans are offered to customers after verification of basic credentials. Hence, as a borrower, you may enjoy the privilege of skipping the initial screening formalities that any other loan applicant would have to undergo.
In spite of the said edge, submission of required documents as per the bank’s norms and processes may be required. The list of documents to be submitted while availing a pre-approved Personal Loan may be listed as below.
- Salary slips of last three months.
- PAN card
- Residence proof which could be Passport, Aadhar Card, or Driving License.
- Last six months’ bank statement records.
Features of Pre-Approved Personal Loans
- Offers for limited periods.
- You enjoy complete flexibility of utilising the funds the way you want.
- Flexibility in terms of tenure of repayment varying from 12 months to 60 months.
- Foreclosure facilities are extended by most of the lenders.
- The amount offered is the maximum amount of loan the bank is offering. You may opt for a lower amount depending on your requirement.
Advantages of Pre-Approved Personal Loans
- Prompt disbursals- You have been approached by the bank specifying the loan amount you are eligible for. Hence, the verification process is much shorter. You may be disbursed the loan amount in a day’s time on certain occasions.
- May be applied online- The process of availing of pre-approved Personal Loan is very simple. You may enjoy this facility through online transactions and requests without having to visit the lender’s office or branch. You may visit websites of any of the leading banks and Apply for Personal Loans.
- Comparatively low-interest rates – You are offered these loans after a complete check of your creditability. Hence the bank is aware that chances of default are remote. As such, these loans are offered at lower rates of interest.
- Minimum documentation for disbursal- Existing customers are generally approached for these loans. This facilitates minimum documentation, may also qualify for paperless approvals in certain scenarios.
- Loans without collaterals- You may avail of such loans without any security or third party guarantee. In fact lien is not created on any asset that is procured by using such funds.
- Power to negotiate- If you are availing this loan through bank’s representative, you are in a better position to negotiate the rate, repayment tenure, or other terms and conditions of the loan. The fact that the bank is approaching you for granting the loan and you are not asking for it puts you in a favourable position.
- Special incentives- In an attempt to get through to you, they may offer special benefits like processing fees waiver, EMI holidays, lower interest rates, etc. If you are in genuine need of funds, this would be apt time for you to grab the opportunity.
Disadvantages of pre-approved Personal Loans
In many cases it would be wiser to opt for instant Personal Loans like Moneyview rather than opting for a preapproved loan from your bank. The reasons for the same may include:
- Call for fast action- Offers for lending pre-approved Personal Loans are generally for specified periods of time only. Hence, a hasty decision may land you up in trouble.
- Chances of rejection- It must be noted that a pre-approved Personal Loan is just an initial offer and not a guarantee for disbursal. In case any discrepancy is observed in the documents submitted, or there is a major change in the Credit Score, it may result in rejection of the Personal Loan. This may further tar your Credit Score.
- Comparison of prevalent interest rates- Though such loans are often offered at lower rates, some banks may further inflate the rate. The rates offered by other banks should be properly evaluated before going in for a pre-approved offer.
- Caveats- The terms and conditions on which such loans are granted should be thoroughly reviewed before opting for it. Few banks may impose high processing fees or substantially high transaction charges which may not be known to the customer at the time of saying a yes to the loan. You should also be particular about the penalty charges applicable on part payment or foreclosure.
You should opt for a pre-approved Personal Loan only if you actually require the funds. A loan gives rise to a financial liability. A loan should be taken only because it is being offered to you.
