Everything You Need To Know About Pre-Approved Personal Loans

Personal loans can help people in need of money tide over their financial crisis quickly. The process to take out a personal loan is even quicker when the debt is pre-approved.

Pre-approved personal loans are instant loans that are offered to only select customers of a lender without any collateral on the basis of their credit history and relationship with the lender. As the lender already possesses the background and credit history of the customer, the pre-approved loan requires minimum documentation.

A pre-approved loan is a promotional facility offered by banks and non-banking financial companies with the aim of growing their loan books with products that attract a higher rate of interest.

Advantages Of Pre-Approved Personal Loans

Instant Disbursal Of Funds:

As the first step of verification is already done before a lender offers a pre-approved personal loan, the disbursal process is much shorter and simpler. The loan can be approved and disbursed the same day after the completion of the verification process. So, it is a good option to obtain funds in case of an urgent need.

Flexibility Of Use:

The pre-approved personal loan, like other personal loans, can be used for any personal purpose, giving the borrower the flexibility to use it as and when required. Unlike other targeted loans, such as a home loan or car loan, the borrower is not required to disclose the purpose for the loan or the time line of usage of funds.

Negotiate Best Interest Rates:

A pre-approved personal loan is only offered by the lender if the customer has a credible record with the bank and good credit history. This implies that the bank is keen on the customer taking up the offer as it has more assurance that the borrower will repay the loan on time. Therefore, the lender is likely to be open to negotiating a favourable interest to capture the business. 

Flexible Loan Tenure:

The tenure for a personal loan usually ranges between three and 60 months. This gives the borrowers the flexibility to assess their financial position and set a tenure that are more suitable to them to ensure they meet the loan repayment deadline.

Rate Of Interest

The rate of interest for the personal loan varies between 10% per annum and 24% per annum for pre-approved loans. However, as the lending rates are linked with the broader rates set by the Reserve Bank of India, the rate of interest may be revised at any time. The rates may also differ from lender to lender.

Eligibility For Pre-Approved Personal Loans

Pre-approved personal loans are offered at the prerogative of the lender. For such instant loans, the main criteria are a good credit history and repayment record.

Most banks extend such offers only to their existing customers. However, some banks may also lend to new customers.

Loan Repayment

The pre-approved loans, like other personal loans, can be repaid in equated monthly installments (EMIs). Borrowers with existing accounts with the lender can opt for auto-debit facility for the EMIs. There are also provisions to prepay the amount. However, there might be some charge levied for the prepayment.

How To Apply For Pre-approved Personal Loan

Usually, banks upload such offers on the customer’s online account or mobile application. Customers may also get notifications from the bank for any offer for pre-approved personal loans. Alternatively, if the need arises a customer can check with the bank if a pre-approved loan offer is available on the account. 

If the borrower is already an account holder in the bank, they merely need to click on the pre-approved offer and select the required loan amount and a viable repayment tenure.

The bank will run a quick verification of the details and after the acceptance of the offer, the loan amount will be credited to the customer’s bank account.

Notes Of Caution

Pre-approved personal loans are usually offered for a limited a period, after which the offers will lapse. Therefore, it requires a quick decision on the part of the borrower. 

A pre-approved loan is not a guarantee for the disbursement of the loan amount. The final approval is at the discretion of the bank.

Sanctioning pre-approved loans may carry some additional fees or charges. Therefore, one must be aware of all the fee and charges before completing the loan process.

Even though it is pre-approved, such loans also carry a penalty on foreclosure or pre-payment of the loan. 

Conclusion

Pre-approved personal loans are one of the most convenient and quickest means of borrowing money. As these loans are offered to customers with a good credit history and relationship with the lender, these loans have emerged as one of the more viable options to raise money for any need that may arise.

Lenders such as IIFL Finance provide personal loans at attractive terms and interest rates to select customers. IIFL Finance, one of the top NBFCs in India, offers personal loans up to Rs 5 lakh via a fully online process that can be completed in just a few minutes and can be repaid in easy instalments over up to 42 months.