A pre-approved personal loan is an offer from your lender to give you a personal loan up to a specific limit, as long as you meet certain criteria set by the lender. Before giving you a loan, financial institutions will check your credit history by looking at how much money comes in and out of your bank account. This helps them figure out how well you can pay back. If your credit history is good, they may send you a message that says, “you can get a pre-approved loan.”
The only difference between a pre-approved and a regular personal loan is how long it takes the lender to give you the money. Lenders check your credit history before extending a pre-approved personal loan to you. Hence, the process is cut short, and you can receive the funds quickly compared to a traditional loan.
So, it would help if you looked at the pros of a pre-approved personal loan before you take one out.
Pros of personal loans that have already been approved
Pre-approved personal loans offer several benefits. Here are some of the significant benefits:
1. Instant approval and disbursal:
If you are already associated with a particular lender, you can get the best urgent loan offers within a day. Since the lender already has your details, the process is quicker.
2. Flexible loan repayment period:
Getting a personal loan that has already been approved can give you more time to pay it back. Lenders provide convenient repayment tenors on pre-approved personal loans. You should think carefully about the length of your loan so you don’t miss payments.
3. Low rates of interest:
Because you have a good credit score, you can negotiate for reasonable interest rates on these loans. And a low-interest rate helps in reducing the overall amount of your loan. This will help you make your loan payments on time.
4. Versatility in use:
You can use the money from this personal loan for anything you want. It could be a trip, a home improvement project, a new gadget, or anything else. A pre-approved personal loan comes with no end-use restrictions.
5. It’s easy to keep records:
Loans that have already been approved require minimal to no paperwork since the lender already possesses your KYC, income, proof of identity, and other information. Even if you’re a new customer, you’ll only need to show a few things to get this loan.
6. Easy to handle:
A pre-approved loan is processed quickly to provide the loan offers amount to the customer within a day. Most of the time, this is because the customer has met the eligibility requirements for the loan offer. If all the information is correct, your loan will be processed quickly.
7. Several deals:
Since these loans are mainly used to boost sales, the lender may add other things to them. It could be a fee that is not charged, a lower EMI or interest rate, or flexible terms for paying back the loan. This can give you an advantage and save you a lot of money.
8. Process without paper:
You can avail of this personal loan online. Most lenders have this option on their websites or mobile apps.
What do you need to remember?
Time limit: Most personal loans that have already been approved have a time limit. One can only get the loans between these dates. You can’t get the loan after the offer period has ended.
Costs: Pre-approved loans are the same as other personal loans regarding loan processing fees and application fees. Even though the interest rates are lower than average, you won’t get a break on the processing fees unless you have a perfect credit record.
Documentation: Before taking out a pre-approved loan, you must carefully read all the fine print in the loan document.
