Most of us keep getting calls or texts from bank executives stating that we are eligible for pre-approved bank loans. The same message would have also popped up across ATMs after withdrawing cash from the kiosks. You may think that it’s just a part of a bank’s promotional activity to increase their sales, but there is more to pre-approved loans, which can benefit you as well. Let’s see how:
Understand Pre-Approved Loans:
To understand what a pre-approved loan is, you should know what a personal loan is. It is an unsecured loan, which one can avail from banks and other financial institutions without having to provide any security or collateral.
One of the biggest advantages of a personal loan is that it can be used for any purpose as per your need. Generally, people use it to cater to immediate financial crunch or cover personal expenses such as medical emergency, home renovation, wedding expenses, or even to consolidate one’s debt etc. It is also easy to apply for a personal loan as you only have to provide KYC documents and its quick disbursal process has made it one of the most famous and preferred choice of loans among applicants.
Why is the offer made?
A pre-approved loan is offered to those with a clean credit history and record. The financial institution carries out an initial analysis of credit score, credibility and financial standing of an individual, and based on this analysis, they make such an offering to them.
This analysis also includes a proper check of the track record of clearing old dues, repayment of existing loans, etc. Therefore, if you have been paying off your dues on time, then it is highly likely that you are eligible for a pre-approved loan.
Pre-approved loans are not strictly limited to personal loans. Banks are known to provide pre-approved loans for cars, home, and even against your credit card.
Benefits of Pre-Approved Loan
If you opt for a pre-approved loan, then you can enjoy a host of benefits:
Since you are already pre-approved, you have the negotiation power. You can negotiate with the bank in terms of interest rate, loan terms, etc.
- Another benefit of a pre-approved loan is that there is a reduced procession time. This is because if you are already eligible for it, you have already met the eligibility criteria of the lender/financial institution. As such, the loan amount can get processed and disbursed at a faster rate.
- This is a great way to meet your immediate cash expenses and other urgent requirements, and it also comes with the convenience of repayment through easy EMIs.
- As you are already eligible for a pre-approved loan, your financial institution may also give you certain special discounts such as waiver of the processing fee, relief from EMI payment for the first 1-2 months, and lower interest rate, as per the bank’s policy and terms and conditions.
Opt for a pre-approved loan only if you need the same. Also, you need to make sure that you get the amount approved which you actually need and the one you can afford to repay. Since a pre-approved personal loan is offered based on the financial institution’s evaluation of your ability to repay the amount, they will lend the amount only after they validate their initial assessment.