A personal loan is an unsecured type of loan and is processed very quickly. A person applying for a personal loan can have the money transferred to his personal bank account without keeping any collateral with the lender, and use it according to his convenience. It helps fulfil immediate cash obligation without the hassle of keeping any asset or valuables as a collateral.
The concept of pre-approved personal loans
Everyone who has a bank account is familiar with the bank e-mails telling you that you are eligible for a pre-approved personal loan. You can see the same on the bank’s website when you log in. So, what exactly is a pre-approved personal loan?
A pre-approved personal loan is basically a personal loan offered by the banks to a client with a clean credit record.
There are various reasons as to why you’d have been chosen to be offered a pre-approved personal loan. Banks usually offer you a pre-approved personal loan if you have a good credit score, or if you have been paying off your credit card bills in a timely manner. They may also approach you if you have been saving money continuously for a long time.
How do you apply for a Pre-Approved Loan?
Being eligible for a pre-approved loan does not necessarily mean that you will get the loan up-front from the bank. Like for any other type of loan, a pre-approved personal loan also has some formalities that have to be fulfilled.
However, this may take lesser time than a traditional personal loan as the bank has already checked your credit score and determined that you are eligible for a pre-approved personal loan. But nevertheless, you will need to complete some formalities while applying for a pre-approved loan.
It will be useful if you keep basic identity proofs with you while applying, such as PAN card, AADHAR card, salary slips, etc.
What are the Benefits of a Pre-Approved Personal Loan
A pre-approved personal loan gives the person quite a few benefits. When you apply for a pre-approved loan, you get the chance to negotiate with the bank, as the bank is the one approaching you to take a loan. Also, the time taken for processing the loan is significantly decreased as the bank already has done a credit score check on you. In case you are selected for a pre-approved personal loan, there is a possibility that you can get a lower personal loan interest rate as compared to a normal personal loan, since the bank is approaching you in order to increase their loan sales.
When you are eligible to apply for a pre-approved personal loan, you can opt for some additional funds and repay them through easy EMI’s. For a person thinking of opting for a personal loan, it is better to apply for a pre-approved one as you can get many benefits from the bank.
What are the Disadvantages of a Pre-Approved Personal Loan?
As there are two sides to every coin, a pre-approved loan also has disadvantages along with advantages. Personal loans, pre-approved or not, should only be applied for if you are in immediate need of money. Some people apply for personal loans and spend it lavishly on their worldly needs, and then repent when it comes to paying off the loan.
Even though some pre-approved personal loans may offer lesser interest rates, still it is a lot. Also, personal loans have heavy penalties imposed on your loan sum, if you fail to pay back your loan on time. So, keep an eye out for these things and read all the terms and conditions before applying for a pre-approved personal loan.
It is evident that pre-approved personal loans can be very useful if you are already planning to apply for a personal loan, or in case you need money immediately. But it is important that you do meticulous research and make an informed decision.