What is Pre Approved Personal Loans: Check Eligibility

What is a Pre-Approved Personal Loan? 

A pre-approved loan is a loan offer given to you by a bank or lender because of your good credit or financial history. You don’t need to apply for it. Such offers are provided by banks or NBFCs to either existing or potential customers who have a strong credit profile and meet their eligibility criteria. 

If you receive this offer from your current bank or lender, you could get the money instantly without needing to go through a long application process.  

How Are Pre-Approved Personal Loans Offered? 

Banking and Non-Banking Financial companies (NBFCs) offer pre-approved personal loans to new and existing customers. The pre-approved loan amount and interest rate offered varies from lender to lender and depends on the credit worthiness of the customer.  

Before giving any loan offer, a lender will determine your credit-worthiness based on various factors. Some of them are:  

1. Credit score 
2. Repayment history  
3. Monthly income  
4. Credit Age  
5. Credit Utilization 

Zype offers personal loans of up to Rs 5 lakhs at an interest rate as low as 1.5% per month. 

Also Read: Why Opting For an NBFC Personal Loan is a Better Option?

If you’ve been offered a pre-approved loan, it could be because of these reasons:  

1. Good Credit Score

A good credit score is something that can attract any lender to give you a pre-approved loan offer. It is a sign that you’re a responsible borrower and can be trusted.  

2. You Have a Stable Income

A stable income helps with calculating your risk. It determines the disposal income you can use to repay your loans. If you’re offered a pre-approved loan, then it could be because while assessing your profile, the lender must have observed a steady income.  

3. You’re An Existing Customer

Being an existing customer can increase your chances of getting a pre-approved offer. This is because the lender already has the information they need to assess your creditworthiness. Make sure you repay all your EMIs on time.  

4. Increase in Salary

If you’ve had an increment in your salary or a new source of income, it would reflect in your savings or salary account. If you’re offered a pre-approved personal loan during this period, it could be because you now meet the eligibility criterion of the lender.  

5. You Repay All Your EMIs on Time: 

This is the biggest green flag any lender looks for. If you repay all your outstanding loans and EMIs, or you have a good repayment history, then this could make you eligible for a pre-approved loan.  

Features of a Pre-Approved Personal Loan 

1. No Collateral 

Most pre-approved loans are collateral-free loans where you don’t have to provide any security or collateral against your personal loan.  

2. Instant Transfer to Account 

If you’re being offered a loan from your existing lender, then you will receive the money in your account in a very short period of time.  

3. No Need to Wait for Approval 

Most lenders take a few days to approve your loan application. But with a pre-approved loan, the time taken to process your instant loan becomes shorter. 

4. Flexible Repayment Options 

You can choose to repay your personal loan in flexible EMIs. The repayment tenure can differ depending on the lender.    

5. Varying Loan Offers 

Every individual is given a different pre-approved loan offer depending on their credit worthiness. This way, you will be given a loan amount that’s best suited for you.  

6. Minimal Application 

If you’re getting an offer from your existing lender, then you don’t need to go through an extensive application process.  

Benefits of a Pre-Approved Personal Loan  

There are many benefits associated with a pre-approved personal loan:

1. Instant Access to Funds  

Because you don’t have to complete any lengthy application process and the money is transferred to your account in only a brief period of time, you get to skip the wait and get instant access to the funds you need.  

2. Improved Credit Score From Timely Repayment

You can use this pre-approved personal loan to build and improve your credit score. All you have to do is repay all your EMIs on time. You can also set all your repayments on auto-debit to avoid missing your EMIs.  

3. Better Financial Planning  

Instead of dipping into your savings, you can always use your personal loan to make purchases. This way, you can keep your financial plan intact while conveniently repaying the loan in manageable EMIs. 

4. Flexibility of Use  

Whether you want to purchase a new bike or have any sudden expense, one of the biggest advantages of an unsecured personal loan is that you can use it anywhere you want. 

Also Read: The Dos and Don’ts of Personal Finance Planning

How to Apply for Pre-Approved Personal Loans?

Most times, you will receive a pre-approved personal loan offer from your lender through SMS, email or even their app, and you can simply avail it. But here’s how you can apply for a pre-approved personal loan:

• Contact your lender and check if they have any pre-approved offer for you based on your profile.
• If you have a pre-approved offer, then you can complete a simple application for this, get approved, accept the terms and choose your repayment plan. After this, you will directly receive the money in your account.
• If you don’t have a pre-approved offer with your lender, start working on your credit score and make sure you are paying all the EMIs on time. The lender will see you fit for a pre-approved offer and you can then complete your application.

Tips to Get a Pre-Approved Loan Offer

If you want to get a pre-approved loan offer from lenders, there are some things you can do to increase your chances: 

1. Maintain a Good Credit Score 

A good credit score automatically makes you a favorable customer for most lenders. If you have a good repayment history, a stable income and a strong credit profile, there are high chances of getting a pre-approved personal loan offer.  

2. Enquire With Your Lender 

If you have or had any ongoing loans with your lender, you can always enquire if they have any pre-approved offers for you.  

Disadvantages of Pre-Approved Personal Loans

While a pre-approved personal loan has many benefits like getting an instant approval or flexibility of end use, these are a few red flags that you should look out for:

• Most pre-approved offers given by lenders are limited period offers. This may not align with your financial requirements, making it a pointless borrowing option for you.
• A pre-approved loan offer doesn’t guarantee you a personal loan. It’s simply an eligibility of your loan. This means that you could get rejected after completing the application.
• While you may receive a specific pre-approved amount and interest rate, there is a chance that it might change after you complete your application.