April 19, 2024

Business Bib

Business & Finance Blog

How do Pre-Approved Personal Loans Work?

3 min read

A pre-approved personal loan is a sanctioned loan a lender offers to a customer who has a sound financial record. Multiple financial organizations provide pre-approved personal loans against basic eligibility. Their quick disbursal and easy documentation make them favorable to tackle a financial challenge.

Who are eligible for pre-approved personal loans?

A financial institution suggests pre-approved personal loan approval to customers who have a stable financial standing and can repay the loan amount in time. There are also a few more reasons why a lender thinks you are eligible. These can be –

  • A good credit score.
  • You repaid your existing loans and credit card debts in time.
  • Financial institutions can give you a personal loan offer after checking your income and expense.
  • You have a stable and steady source of income.
  • You maintain a healthy sum which is above the specified amount of monthly balance.

Availing your pre-approved loan

You will have to go through a few formalities before a lender disburses your pre-approved loan. The procedure will be similar to that of when you apply for Personal Loan, but the processing time will be significantly less.

You won’t have to submit a lot of documents either as the financial institution offering you the advances already knows about your credit score. However, you might have to present a few documents such as –

  • Past few months’ salary slip.
  • Bank statement.
  • Identity proof like the Aadhaar Card.
  • Residential address proof.
  • PAN Card.

Availing a pre-approved personal loan is easy and quick. As you are already with that financial institution for some time now, they will not ask for a lengthy documentation and verification process. Also, you can get a host of benefits along with a pre-approved loan.

Before providing you with a pre-approved loan, the lender will thoroughly check your financial standing and existing credit history. They will only offer you pre-approved personal loans if you have cleared all your credit card debts and due loans in time without missing the repayment dates. If you have a sound financial history, a lender will be able to trust you with low-interest rate and longer tenor.

You may even get the chance to negotiate your personal loan interest rates with the lender. A lending company might offer you an affordable interest rate. Furthermore, you can also consult loan tenure and amount if you satisfy all the requirements mentioned above.

Also, you will have the convenience of repaying with EMIs. You can use an EMI calculator to check how much you will have to repay monthly depending on your tenure, rate of interest, and principal.

A few important things to remember

There are a few things you should keep in mind while going for a pre-approved personal loan.

  • Most of the pre-approved loans that are on offer are time-bound. You will have to apply for them within a limited time.
  • The financial institution can revoke the offer if you do not fill all the necessary documentation and submit proper documents.
  • Always compare interest rates and other available features with a personal loan before borrowing.
  • You can use a personal loan eligibility calculator to check if you are entitled to the loan or not.

There are multiple NBFCs and other financial organizations that offer pre-approved personal loans. Companies like Bajaj Finserv bring pre-approved offers on personal loans, home loans, business loans and a host of other financial products and services.