Pre Approved Personal Loans: Definition, Eligibility, Features and Benefits

What is a Pre-Approved Personal Loan? 

A pre-approved personal loan is a loan offer that is received even without even applying for any loan. 

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’re getting this offer from your existing banking or lending partner, then you might get instant disbursal and not even have to go through any lengthy 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 

On an average, non-banking financial companies offer pre-approved personal loans at an interest rate ranging between 11% to 36% per annum.  

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

Eligibility for a Pre-Approved Personal Loan 

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 loan becomes shorter. 

4. Flexible Repayment Options 

You can choose to repay your loan in flexible EMIs. The repayment tenure can range between 3 months to 60 months depending on your 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. 

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.

Frequently Asked Question

How Much Time Does It Take For Pre-Approved Loan Approval And Disbursal?

The time taken for approval and disbursal depends on the lender. There are many loan apps like Zype that give approval in less than 30 seconds and disburse the loan within 24 hours.

Is It Safe To Take A Pre-Approved Personal Loan?

Yes, it is safe to take a pre-approved personal loan. However, it is important that you do your research and ensure that they’re following all the regulatory requirements of the RBI.

How To Avail A Pre-Approved Personal Loan?

Usually, if you’re pre-approved for a loan, you will receive communication from the lender. But you can always enquire with your bank or lender if they have any offer for you.

What Credit Score Do You Need For A Pre-Approved Loan?

You can increase your chances of getting an offer with a high credit score. It is recommended to have a 650+ credit score to get a pre-approved loan.

Is It Possible To Get A Pre-Approved Personal Loan Without Documents?

You can get a pre-approved personal loan offer without documents. But to unlock your personal loan, you will have to provide the required documents to your lender.

Are There Any Charges Associated With Pre-Approved Loans?

Yes, after you have completed your application and are approved for a loan, you will be charged some common fees associated with the loan like your processing fee, interest rate, etc.

What Are The Differences Between Personal Loans And Pre-Approved Loans?

One of the key differences between a personal loan and pre-approved loan is that pre-approved personal loans are limited time offers but you can apply for a personal loan whenever you want.

Can I Avail A Pre-Approved Loan Anytime?

No, you cannot avail a pre-approved personal loan anytime because the offers are valid only for a specific period of time.