Pre-approved Loan: What is a pre-approved personal loan? Is its interest cheaper than a normal loan?
When there is an urgent need for money, people generally consider it better to take a personal loan. The reason for this is that banks or non-banking financial institutions (NBFCs) immediately give this loan to those customers who have a good credit history. At the same time, banks also offer pre-approved personal loans to some customers. A pre-approved personal loan is just like a personal loan, the only difference is that the customer does not have to apply to get it, rather the bank itself contacts the customer for it. The interest on this loan can also be less than a less common personal loan. However, the bank doesn't need to offer a pre-approved personal loan to every customer at a lower rate.
A pre-approved loan is an offer that the bank gives to its customers based on their credit score, income, and their old relationship with the bank. Pre-approved loan means that the bank has already evaluated your financial situation and credit score and considered you eligible for a loan. In this process, the bank sends you an offer that includes the loan amount, interest rate, and other terms. Pre-approved loan offer The bank sends the offer to the customer through email, SMS, or mobile app.
Features of pre-approved loan
Pre-approved loans are a convenient option that helps in meeting financial needs immediately. It also has some features-
Fast processing: The loan is approved and disbursed quickly as the customer's financial information is already available.
Less documentation: In a pre-approved loan, very few papers have to be given to the bank. In most cases, documentation is not even required.
No guarantee: This loan is unsecured, so there is no guarantee required.
Top-up option: Additional loans can also be given to customers with existing loans.
What is the process?
The bank analyzes your credit score and financial history. If you are eligible, a pre-approved loan is offered. After this, the customer can read the loan terms and accept it. According to experts, take a pre-approved loan only if its terms and interest rates are suitable for you.
Avoid taking more loans than you need and use it wisely. Find out about charges like processing fees or prepayment penalty in advance. Even though the loan is pre-approved, the interest rates are not always the lowest. So definitely look at the interest rates.
