These days, many people receive messages and calls informing them that they are eligible for a Personal Loan pre-approval. Some also receive occasional emails congratulating them, stating they are just a few steps away from securing a pre-approved Personal Loan in their name. What these loans are and why they are significant for aspiring borrowers?
People with excellent credit history often receive such loan offers based on their financial discipline and repayment consistency. In this in-depth guide, you will learn everything you must know about pre-approved Personal Loans, eligibility, benefits, and much more.
What is Personal Loan Pre-Approval?
A pre-approved Personal Loan is an instant credit a lender disburses to its select customers. It requires no security or collateral, but just basic documentation. All they need is a good credit history and a consistent repayment record to offer this instant loan facility.
Many aspiring borrowers avail these facilities to meet their urgent capital needs, as these loans are much easier and faster to process. The interest rates are also affordable, though they may vary across lenders. Some lending institutions also offer Personal Loans for bad credit, but at a higher interest rate.
How Does Personal Loan Pre-Approval Work?
There might be several reasons why an individual receives a Personal Loan pre-approval, including the following:
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The loan company must have checked the customer’s credit score and repayment history to establish their creditworthiness.
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The lender must have reviewed an individual’s credit behaviour and examined their bank balance to ensure timely repayment.
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The borrower must be an existing customer of the loan provider and demonstrated a regular and prompt repayment history.
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The finance company must be monitoring an individual’s income and expenditures compared to their creditworthiness.
Who is Eligible for a Personal Loan Pre-Approval?
To qualify for a pre-approved Personal Loan, an individual must meet the following eligibility:
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A consistent repayment history with a good credit score.
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Existing customers of the loan company with no pending dues.
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A clean record of timely debt repayment.
Features of a Pre-Approved Personal Loan
Before accepting the offer, it’s crucial to understand its primary features. These include the following:
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No Security or Collateral Required: Like Personal Loans, pre-approved Personal Loans are also unsecured, which means aspiring borrowers do not need to provide any collateral, security, or guarantor.
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Different Loan Amounts: Eligibility for a Personal Loan pre-approval varies for each borrower. Lending companies determine an individual’s eligibility based on their repayment history, credit score, income, DTI ratio, etc.
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Minimum Documentation Requirements: A pre-approved Personal Loan is easy to obtain, considering the hassle-free application process and minimal documentation requirements without any hefty paperwork. Aspiring borrowers can quickly apply with scanned copies of their documents uploaded online.
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Flexible Repayment: The borrower must repay a pre-approved loan in EMIs spread across the repayment tenure they select. They may opt for the auto-debit facility to pay the EMIs automatically from their bank account within the due date.
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Fees and Charges: Loan providers levy certain charges, including processing charges, secure fees, penal interest, EMI bounce charges, foreclosure charges, etc. Since these charges vary between lenders, one must read the terms and conditions carefully before borrowing.
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Quick Disbursal: Existing customers of a loan company get disbursal directly into their bank account within minutes of offer acceptance.
Benefits of a Personal Loan Pre-Approval
Let’s look into the benefits of obtaining a pre-approved Personal Loan:
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Instant Access to the Required Funds: It provides quick access to funds for emergencies. Since the lenders have already approved these loans, they process them quickly and disburse them within a few minutes after completing the verification process. Since the loan amount has no end-use restrictions, borrowers can use it for any legal purpose.
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Competitive Interest Rates: Individuals with a good credit history quickly qualify for pre-approved Personal Loans at the best interest rates. Personal Loans for bad credit are also available, but they may have a higher interest rate than normal. Therefore, maintain a clean repayment record to get the best loan deals on Personal Loans.
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Flexible Repayment Tenure: Borrowers are free to choose a repayment period suitable for their repayment capacity. With a tenure of up to 36 months, one must consider their repayment capability when finalising a loan tenure. It ensures no chances of loan default, making the loan deal safer for the lenders and convenient for the borrowers.
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No Paperwork: Since loan companies often provide personal loan pre approval to their existing customers, they already have the customer’s KYC, income, and bank details in their database. Even if they need some latest documents to confirm eligibility, they accept soft copies of the required documents uploaded through their website or app. It makes the loan process much easier, faster, and hassle-free.
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Quick Processing Time: Loan companies offer pre-approved Personal Loan only to eligible candidates after severe scrutiny. So, there is no need to worry about lengthy applications, verifications, and loan processing. Since these loans are already approved, the processing and disbursal take much less time than regular loans.
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Negotiation Power: When an individual receives a pre-approved loan offer, the loan provider approaches them with their product instead of the customer requesting a loan. That means the customer is better positioned to negotiate the loan terms and interest rates.
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Add-Ons: The loan companies often add small perks to attract high-credit borrowers, such as processing fee waivers, discounted interest rates, no EMI for the first few months, etc. Those who really need a loan can significantly reduce their overall loan cost with these add-ons.
Gone are the days when loan applications took several branch visits and long waiting periods. Thanks to Personal Loan pre-approval, you can now receive the required money instantly without the hassle of extensive processing and documentation. Aspiring borrowers can easily get a pre-approved Personal Loan through reputed lenders like Hero FinCorp online.
