Pre Approved Loans: Few Things You Need to Know About Pre-Approval
A personal loan is an unsecured credit facility availed by individuals to fulfill their needs. When it comes to a pre-approved loan, it is somewhat different from general loans you avail from your lender. In general, it is a loan offer you get from your lender before applying for the credit.
This pre-approved personal loan is offered to loyal and existing customers who retain a healthy credit history and proper track record of debt repayment. Keep reading to know more about a pre-approved personal loan.
Things to Know about Pre-Approved Loans
The pre-approved personal loans are instant loans offered by financial institutions to their existing borrowers as per their credit score, repayment history, and trustworthiness. Following are some essential things one needs to know about pre-approved personal loans.
- Advantages of Pre-Approved Loan
Mentioned below are the advantages of a pre-approved personal loan offer:
- Less Documentation
Since you previously have an account in your financial institution, they will already have your details in their records. Also, having a steady repayment history will make you a trustworthy borrower to your lending institution. Thus, all you have to do is to submit one or two extra documents while applying for this loan.
- Fast Disbursal
When it comes to a pre-approved personal loan, your lender will not check all eligibility criteria and approve your request as per your credit score and credit history. Therefore, the processing time will be much lower, and the amount will be credited to your bank account quickly.
- Reasonable Interest Rate
Your lending institution will provide you a pre-approved loan offer at a reasonable interest rate if you retain a healthy credit score and repayment history. This way, you can save your monthly expenses by a big margin and enjoy sufficient time for repaying the loan.
- Flexible Tenure
While opting for a pre-approved personal loan, you will enjoy the freedom to choose a repayment tenure based on your convenience. In general, this tenure of repayment ranges between 12 months and 60 months. However, remember that if you choose a longer tenure, you have to pay higher EMIs and vice versa. In order to calculate the monthly installments, you can use the personal loan EMI calculator to get prompt and accurate results.
- Collateral-Free
There is no need to offer any of your property as collateral with your lending institution when it comes to pre-approved personal loans. Therefore, you will not have to bear the hassle of arranging the property papers or even the risk of losing your asset in the event you become incapable of repaying the loan.
After understanding the advantages of a pre-approved loan, consider its eligibility criteria, and make sure you meet all of them.
- Eligibility Criteria for Pre-Approved Personal Loan
Mentioned below are the eligibility criteria you should meet for pre-approved personal loans:
- The applicant needs to maintain a healthy credit score of 750 or higher.
- The borrower must have a pre-existing account and a good relationship with their financial institution.
Once you have fulfilled all eligibility criteria, have a glance at the important documents required for a pre-approved personal loan.
- Documents Required for Pre-Approved Personal Loan
Following are the essential documents which you have to submit at the time of applying for a pre-approved personal loan:
- Identity proof (includes PAN card, Aadhaar card, voter ID card, and driving license)
- Residential proof (includes Aadhaar card, rental agreement, utility bills, etc.)
Apart from the above-mentioned documents, your lender will often require additional documents such as income proof documents, Form 16, or Income Tax Returns for the last 2 years, so keep all important documents handy. Make sure that there are no errors in your documents. Otherwise, your lender will reject your loan request.
After knowing the eligibility criteria and documents required for a pre-approved loan, you can proceed with the application.
- Steps to Apply for a Pre-Approved Personal Loan
If you are eligible to get a pre-approved personal credit facility, your financial institution will send you a notification regarding that through SMS or mail ID. Subsequently, you can follow these steps to apply for this loan:
Step 1: Navigate to the official website of your financial institution.
Step 2: Visit the page of ‘personal loans’.
Step 3: Fill out the application form with your personal details
Step 4: Choose credit amount within the pre-approved limit
Step 5: Select a tenure according to your capacity
Step 6: Thoroughly check your details before submission
Step 7: Upload all necessary documents
Step 8: Select ‘Submit’.
Upon completing all these steps, your pre-approved personal loan application process will be successful.
Now, you know the details and technicalities of a pre-approved loan and how it smoothens the loan application process. So, if you want to enjoy the opportunity of this unique credit facility, maintain a healthy credit score, repayment history, and a good relationship with your financial institution.