April 22, 2020
A pre-approved personal loan is an instant loan which is provided for select borrowers. It usually means you’re only a few steps away from getting the personal loan. Several banks and NBFCs offer pre-approved loans and this usually requires no collateral, security and minimum documentation.
So before taking pre approved personal, you need to see the advantages and disadvantages of Pre personal loans.
Advantages of Pre-Approved Personal Loans
There are several advantages associated with pre-approved personal loans. They’re given below.
1 - Instant Approval and Disbursal
If you’re an existing customer of a particular financial institution, you can get the loan amount disbursed within a day to your account. It can happen so quickly since the bank already has your details.
2 – Flexible loan repayment period
Getting a pre-approved loan can help you get flexible tenure on repayment. Since the banks would trust you with your credit-worthiness, it results in flexible repayment terms or loan tenure. It can range between 1-4 years. You must carefully consider your loan tenure so you don’t default on your repayment.
3 – Low-interest rates
Due to your good credit score, you can get competitive interest rates on these loans, which is why you become eligible for this offer in the first place. Because of your clean financial record, the lender would offer low-interest rates on pre-approved loans. It would help you to remain punctual with your loan payments and not fall into default.
4 – Usage flexibility
You can use this personal loan amount for any of your needs. It can be education, home improvement, a vacation, buying a gadget and more. The loan amount can be used for flexible purposes.
5 – Easy documentation
Pre-approved loans offer paperless documentation. It is only possible for existing users of a bank due to them having your KYC, income, identity proof and other details. If you’re a new customer, there will still be minimum documentation for this loan.
6 – Quick processing
You can get the loan amount within a day due to the quick processing of a pre-approved loan. This happens because, in most of the cases, the customer has passed the eligibility requirements of the loan offer. If all the given information matches, your loan will be processed very quickly.
7 – Several discounts
Since these loans are offered mostly to increase the sales, the lender may attach certain offers along with it. It may be a fee waiver, lower EMI and interest rates, and flexible repayment terms. This can help you get an upper hand and save up a lot.
8 – Paperless process
You can apply for this personal loan entirely online. Most of the lenders offer this facility either on their mobile app or website. All you’ll have to do is fill the form online and upload the copy of documents if you’re not an existing user of the bank. After this, the bank will start the processing of the application and disburse the loan amount to your account.
Disadvantages of pre-approved personal loans
Pre-approved personal loans have multiple pros, but certain cons as well. They’re given below.
1 – If any mismatch is found in your documents and the loan’s requirement, the loan amount will not be credited to your account. Just by making an offer, the bank is not bound to offer to the loan to you if such a case arises. Hence, your application can be rejected.
2 – Pre-approved offer only indicates that you’re eligible for the loan. It doesn’t mean that you’ll get approved for the loan definitely.
3 – The interest rates may increase for pre-approved customers. Therefore, check the interest rates with your lender before accepting a loan offer. Although it is not mandatory that the loan interest rate will increase, it is possible.
4 – Take a good look at the terms and conditions laid out by the lender and the charges and fees levied by them. These may pose a burden on you in the long run, so keep a check on them.