Have you ever received a message or call from a bank offering you a pre-approved personal loan? Whilemost of us ignore such offers, theycanbe useful when you plan to renovate your house, get married, take a vacation or there is a medical emergency and are short on funds. The biggest advantage of pre-approved loan is a fast processing time with minimum documentation.
What is a Pre-approved Personal Loan?
A personal loan is a collateral- free loan that can be availed from banks and NBFCs to deal with multiple situations you may face in life. A pre-approved personal loan is a loan that is offered by the bank on its own without you even applying for it. The bank extends these pre-approved offers mostly to their customers who have had a long relationship with it. Banks, having analyzed your financial record of the past, are already confident of your repayment ability, and hence, offer you a pre-approved loan.
When a pre-approved personal loan is offered, all you need to do is to accept the offer online or through their customer care and the money can get disbursed to your account in a few hours with minimal or noformalities.
Who is Eligible for a Pre-approved Personal Loan?
The pre-approved personal loan is offered to those individuals who meet the following parameters that may vary from bank to bank:
- CIBIL score
- Current balance
- Saving history
- Repayment history
What are the Documents Required to Avail a Pre-approved Personal Loan?
Once the pre-approved personal loan offer comes to you and you decide to accept it, the bank may ask you to submit the following documents in order to process the loan application:
- Pan Card
- ID Proof (Aadhaar Card, Voter ID Card)
- Bank Statement
- Address Proof (Passport, Voter’s identity card, Driving license, Utility Bills)
- Salary slip of the past 3 months
However, if you are an existing customer of the bank, you may not need to submit all these documents, as the bank already has these in its records.
Why Should You Accept the Offer of a Pre-approved Personal Loan?
- Quick processing: The bank has offered you this loan after checking your financial history and hence resulting in less documentation and quick disbursal of loan amount in your account within a few hours, which really helps you to deal with any emergency situation.
- Avail online: Almost all the banks allow you to accept the pre-approved personal loan from the comfort of your home or office and without even visiting a branch, you can avail a personal loan
- Negotiation power stays with you: Since the bank has extended this loan to you, you can use the opportunity to negotiate to get a better offer including a better loan amount and other terms and conditions.
- Attractive interest rate: At times, apre-approved personal loanmay be offered with a lower interest rate so that the bank can attract more customers. Also, the bank has already checked your financial history before offering you the loan so feels confident in offering you a lower interest rate.
What Are The Things to Consider Before Accepting a Pre-approved Personal Loan Offer?
- Ask yourself if you really need it: Do not avail a pre-approved personal loan just because it was offered to you.Though it is pre-approved with easy processes,you still have to repay it through EMIs which may be an additional burden financially. Hence, avail a loan, pre-approved or not, only if you need the funds for an important need.
- Compare: Yes, the loan is offered to you from the bank and comes with a lower interest rate but do not forget to explore other banks and see the features and interest rate that they are offering. You might get a better deal with any other bank. You can see the personal loan offers by all the banks here.
- Validity: Pre-approved loans are an ‘Invitation to Apply (ITA)’ and may be valid only for a limited period of time. If you wish to avail this loan, you will have to apply within a certain period of time.
- Hidden charges: Ask the bank about all the hidden charges including pre- closure charges and processing fee as even if it is a pre-approved personal loan, it may come with many hidden charges.
- Loan amount: Based on your previous repayment, current account balance, etc. the amount of a pre-approved loan is offered by the bank. If the offered loan amount is sufficient, avail it but if it is not, you can always try and negotiate with the bank for an ideal amount.
It is important to know your monthly expenses, savings and repayment ability before you accept a pre-approved personal loan offer. You will have to repay the amount with fixed monthly EMIs so choose an amount and tenure that do not add stress and inconvenience in the future.