A Detailed Guide on Pre-Approved Personal Loans

Pre-approved Personal Loan

Pre-approved Personal Loan

Many of us have received texts and emails from banks and many other lenders informing us that we are eligible to secure a pre-approved personal loan. Sometimes we are told by relationship managers at banks that we are a few steps (or clicks) away from being qualified to get a pre-approved personal loan. Let’s try and understand what this means and whether it is possible to bypass all the procedures to secure this loan.

What is a Pre-Approved Personal Loan?

A pre-approved personal loan is an unsecured credit offered by banks and various financial institutions if you have an excellent credit history, good repayment record, and financial discipline. If an individual has repaid all the EMIs on time, has consistently been showcasing a great credit score, banks are likely to reach out to them with an offer. Even those individuals who have good savings and steady income can be eligible for a pre-approved personal loan. It is essentially an instant personal loan offered by banks with minimum or no documentation which takes the least processing time.

Personal loans are availed by borrowers to finance their immediate short-term needs, be it house renovation, marriage, foreign holiday, or even medical emergencies without the need to furnish any collateral or security, but by providing basic documentation of bank records and history. Being eligible for pre-approved personal loans makes it faster to get this quick funding as it eliminates most paperwork and documentation.

Eligibility for Pre-Approved Personal Loans

In order to be entitled to a pre-approved personal loan, certain criteria of lenders have to be met by the borrowers. They include

  • A Good Credit History

    Credit Score Effect on Pre Approved Personal Loan
    As mentioned before, if the individual has a good repayment record and has regularly repaid his debts, bills, and other financial transactions that have been methodical, then banks will be willing to offer you pre-approved personal loans. A CIBIL score of 750 and above indicates an individual has been financially responsible.

  • Should Ideally Be The Existing Customer Of The Bank

    A long and proven transaction record with an existing bank is always beneficial as banks trust loyal customers. A good relationship with the bank is always a plus. Some banks are open to lending these loans to new customers as well.

  • Good Income and Saving History

    A stable income and absence of any credit history, along with good savings in your accounts will also give you an upper hand in being picked for a pre-approved personal loan.

If you have fulfilled the above criteria, you can always call up the bank or visit them to find out if there is a pre-approved personal loan available to meet your financial needs.

Top Banks that Offer Pre-Approved Loans

Bank name  Loan amount  Rate of interest  Processing fee  Repayment tenure 
State Bank of India At the discretion of the bank At the discretion of the bank NIL At the discretion of the bank
ICICI Bank Up to Rs.20 lakh 11.25% onwards 1.25% of loan amount + GST Up to 60 months
HDFC Bank Up to Rs.15 lakh 10.75% onwards 2.5% of loan amount subject to a minimum of Rs.2,999 and a maximum of Rs.25,000 Up to 60 months
Aditya Birla Capital Up to Rs.15 lakh 14% onwards At the discretion of the bank Up to 36 months
IDFC First Bank Rs.1 lakh onwards 10.75% onwards NIL Up to 84 months

How to Avail a Pre-Approved Personal Loan

While lenders usually reach out to the customers informing them of their pre-approved personal loan eligibility, if you need a personal loan online and have been disciplined in your financial transactions, you can approach the bank or check online to know your eligibility. Once you have been informed that you can apply for this loan anytime, here are the steps to follow –

  • Visit the nearest branch or visit the bank’s website and fill in the application form
  • Select the loan amount and tenure
  • Furnish documents if required (PAN card, income proof, address proof)
  • These details are verified by the bank and the loan gets disbursed and credited to your account in a few hours or days.

Interest Rates Comparison

Most leading banks and NBFCs(Non-Banking Financial Companies) in India offer pre-approved personal loans to eligible customers. Here is a comparison of the pre-approved loan interest rates of some major banks and NBFCs in India –

         Provider Name         Interest Rate*
State Bank of India 9.60% onwards
HDFC Bank 10.50% onwards
Axis Bank 11.00% onwards
ICICI Bank 10.50% onwards
Bajaj Finserv 11.49% onwards
Kotak Mahindra Bank 10.50% onwards
IDFC First Bank 11.00% onwards

 Also Read: Latest Personal Loan Interest Rates of Banks

Features and Benefits of Pre-Approved Personal Loans

Almost Zero Paperwork and Nil Documentation

Zero Paper Work on Applying Loan

As the initial assessment and evaluation of an individual’s credit history have already been done by the lender, there is not much paperwork or documentation that is sought by the banks. Since credibility has already been established, the process will be free of complex or heavy paperwork. The bank will already have all the details of your income, KYC, etc in their database.

Fast Processing

The processing time to disburse the loan could take just a few hours as all the eligibility criteria have been met by the borrower. If you are an existing customer of the bank, the amount is most likely to be reflected in your bank account within no time after the initial verification of your credit records.

No Collateral or Security

No Collateral

The borrower does not have to pledge any collateral or security to secure pre-approved personal loans. This is applicable even if the personal loan is not instant.

Preferential Personal Loan Interest Rates

Since pre-approved personal loans are offered to those with good credit history and savings, the lenders are offering competitive rates of interest that are generally lower than the usual rates.

Flexibility in Repayment

The repayment tenure can be anywhere between 12 months to 60 months and the borrowers are given the flexibility to choose the tenure as per their convenience.

Offers and Discounts

Banks may offer you special rates on interests or waive off processing fees since they are already convinced of your repayment history.

Disadvantages of Pre-Approved Personal Loans

  • The pre-approved loan offer may only be valid only for a few days or during certain periods
  • If there is any discrepancy found during the application process, the loan may be rejected. Pre-approved does not always mean instant disbursal. Sometimes it may get rejected.
  • Interest rates may increase. Some banks may increase the interest rates to give you a quick loan. So it is important to be aware and alert.

Also Read: How will I know if my personal loan is approved or rejected?

Always remember

Maintain a High Credit Score

Never falter in your repayments and credit card bill payments. Be a responsible customer and that will earn you instant loans with good interest rates when required.

Keep a Tab of Different Pre-Approved Loans

So it is better to keep track of these announcements from your lender on a regular basis. Lenders announce during certain seasons or months.

Do your Homework

Do thorough research on available personal loans from other lenders and compare the interest rates and go for the one that best suits your needs.

Understand Other Charges

Make sure to understand how much processing fee, pre-payment charges, and pre-closure charges banks will ask for offering pre-approved personal loans.

Conclusion

Life can throw unpredictable situations at us and during times of need, a financial cushion always helps. While a personal loan can be availed for multiple reasons, a pre-approved personal loan can make lives easy by offering credit and disbursing fast cash without documentation and paperwork. Therefore, it is important to keep your credit score high and maintain the financial discipline to secure these quick loans.