March 12, 2020
Have you ever come across an email or messages which say you’re eligible for a pre-approved personal loan? If yes, then chances are that you are!
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. But how do the financial institutions know that you’re eligible for such an offer? Let’s find out.
Pre-approved personal loans are offered to customers who have a clean financial record, good credit and repayment history. It is usually offered to increase the sales of loans. These kinds of loans can help with urgent financial need of customers since the disbursal time is quick due to pre-approval.
How do banks know you’re eligible for pre-approval?
Several times banks and NBFCs check the credit score of people. This would tell them about your financial history and if you’ve been a good customer in the past. In case you’ve taken a loan or indulged in any other kind of financial activity from a particular lender, they may have all your details and check if you’re eligible for pre-approved personal loans. If you had taken a loan and had been making on-timely repayments, that can also help in getting a pre-approval offer
In other cases, the banks would’ve reviewed your creditworthiness and history which tells them that you are responsible with repayments and have a good transaction rate. It can also happen that a financial institution is keeping a tab on your expenditure, income and your credit-worthiness.
How to apply for a pre-approved personal loan?
In case you haven’t received an email or an SMS, you can still get a pre-approved personal loan. You can check with your bank and see if this offer exists and if you’re eligible for the same. If you have an account with the lender, you can log in to your net banking account and see if you can get such an offer.
After this, you will be required to fill an application form. You can go to the bank and fill the form. The easier alternative to this would be to fill the form online, through the lender’s website or mobile app. Fill all the details in the form. Select the loan amount and the repayment term that is suitable for you and submit it.
The application will go under processing after this. If all the details and requirements match, the loan will be disbursed to your account after verification and receiving the offer.
In case it is an NBFC or you’re not a customer of a said bank, you may be required to submit certain documents. They may include – Last 3 month’s salary slips, KYC details and more.
Features of pre-approved personal loans
Apart from quick disbursals and minimum documentation, pre-approved personal loans have some more unique features.
1 - Instant loans don’t require any security or collateral.
2 - The pre-approved loan amount differs for each customer. This is due to the different credit history of each customer.
3 – You can get flexible repayment tenure and would be making them in Equated Monthly Payments (EMIs). You can also go for auto-debit options where the loan amount will be debited from your account each month on its own.
4 – Most of the lenders’ levy certain charges and fees on personal loans. It can be a processing fee, EMI charge, foreclosure charge and more. It differs for each lender so you must pay attention to them.
How to be eligible for pre-approved loans
In order to secure this offer, there are certain tips you will have to retain in mind.
1 - Keep a high credit score
Maintaining a good credit and repayment history can help you get this kind of loan. Having a stable income and good savings also help as it establishes a trust with the bank that you can make repayments.
2 - Look for seasonal offers
These offers may be valid only for a short period of time, festive or sales season. Hence, look out for these seasons and offers. You can also ask your lender in advance to notify you when such an offer arises.
3 – Do some research
You must always go through the eligibility, terms and conditions of the loan offer. This can help you be aware of the additional charges and fees on the personal loan. Also, compare this kind of loan with other personal loans and see which option suits you the best. You can compare the fees and charges, interest rates, repayment terms and more to get the best loan for you.