How to Get Pre Approved Personal Loan An In-Depth Guide

Pre-approved personal loans

Pre-approved personal loans

Dear Customer, you are now eligible to avail an instant pre-approved personal loan from XYZ Bank.’ Does it sound familiar? There is no doubt that most of us have received such phone calls, SMS messages, or congratulatory emails from Banks and other lenders. Have you ever wondered why they approach us and what this means? Is it that easy to bypass all the procedures and secure a personal loan?

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What Is A Pre Approved Loan?

In the process of money lending, pre-approval refers to the status of being pre-qualified for a certain amount of mortgage or credit from a particular lender. Banks offer this to their existing customers who meet all the eligibility criteria set by them. It is also significant to note that these are acquired with little or no documentation and without any collateral.

Depending on the lenders, the rate of interest can be higher or lower i.e., it can vary between 10.49% p.a. and 14% p.a.. As a marketing strategy, pre-approved loans are one of the methods that Banks use to increase sales of their loan products.

Eligibility Criteria For A Pre Approved Personal Loan

Individuals with good savings and a steady income are eligible for pre approved personal loans. In order to pre qualify personal loan, the applicant must meet specific criteria set forth by the lender. Such as:

  • Good Credit History

A Good Credit History

A credit score of 750 or higher indicates that an individual is financially responsible. The individual must have regularly repaid his debts, bills, and other financial transactions on time. If so, the Bank will be willing to offer him an instant pre approved personal loan.

  • Should Ideally Be The Existing Customer Of The Bank

A long and proven transaction history with the existing Bank is always beneficial as Banks trust their 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.

 Also Read: Canara Bank Pre-Approved Personal Loan

  • Good Income and Saving History

A stable income, a good credit history, and savings in your accounts will give you an upper hand for a pre approved personal loan.

If you have fulfilled all the above criteria, you can always call the Bank or visit them to find out if you are eligible for an instant pre-approved loan to meet your financial emergency. Applicants with no credit or repayment history may also pre qualify personal loans as long as they have substantial savings and a steady source of income.

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How To Get Pre approved Personal Loans Online

In an effort to streamline the digital lending transaction journey for their clients, several Banks and financial institutions, in recent years, have introduced pre approved loans online as one of the features, i.e., ‘Project Wave’. As a result, it does not require any manual intervention or physical documentation on the part of the user.

For pre-approved customers, the loan application may be submitted through Net Banking or Mobile Banking App and via the Bank’s website. Using the offer, the customer can take advantage of the amount in just a few clicks, and it will automatically be credited to his/her operative savings account by the system at the same time. Pre Approved Loans online loans offer greater advantages. Some of them are as follows:

  • Zero processing fee
  • No Branch Visit
  • No pre payment penalty
  • 24×7 accessibility

A digital process is used for processing the loan, the generation of the Sanction Letter, the documentation associated with the loan as per the Bank’s policy, and the crediting of the loan proceeds to the customer’s account. It is the customer’s responsibility to reimburse all charges incurred by the company.

How Does A Pre approved Personal Loan Work?

A pre-approved personal loan is an unsecured credit or a short-term loan. The majority of Banks and NBFCs (Non-Banking Financial Companies) offer this to their existing customers based on their credit history, income, employer profile, financial discipline, etc. Often, such loans come with instant disbursement at low-interest rates.

If an individual has repaid all the EMIs on time and consistently showcases a high credit score, then:

  • Banks are likely to reach out to them with an offer of low-interest rates.
  • The instant personal loans can be approached with minimum or no documents and collateral.
  • Competitive interest rate

Also, it takes the least processing time.

Borrowers avail of personal loans to finance their immediate short-term needs. It could be anything! For example, it can be a house renovation, wedding celebration, vacation to a foreign land/country, or even a medical emergency without the need to furnish any collateral or security. However, one must show Bank records and a record of one’s financial history in order to qualify.

Obtaining a pre-approved personal loan has many advantages, including the ease of getting this rapid funding. Pre-approved loans have eliminated the majority of paperwork and waiting periods.

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Top Banks That Offer Pre Approved Loans

The following table illustrates the interest rates for pre-qualified personal loans offered by the leading Banks in India.

Bank Name Loan Amount Rate of Interest Processing Fee  
State Bank of India Up to Rs.20 Lakhs 9.60% onwards 1.5% of loan amount + tax Apply Now
ICICI Bank Up to Rs.50 Lakhs 11.25% onwards 1.25% of loan amount + GST Apply Now
HDFC Bank Up to Rs.40 Lakhs 10.75% onwards 2.5% of loan amount subject to a minimum of Rs.2,999 & a maximum of Rs.25,000 Apply Now
Aditya Birla Capital Up to Rs.15 Lakhs 14% onwards At the discretion of the Bank Apply Now
IDFC First Bank Rs.1 Lakh onwards 10.49% onwards Up to 3.5% of the loan amount Apply Now

Note: The interest rates of these personal loans are subject to change.

When Does One Get A Pre Approved Personal Loan Offer?

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As you can see, there are several reasons why your Bank believes you would be eligible for a pre-approval loan offer if you ask for it. Here are a few of them:

  • Your credit score is good, and you have a good history of managing your credit.
  • As a responsible borrower, you have been paying your loan/credit card dues in the most punctual manner with your Bank.
  • The Bank checks your income and expenses to find whether you are eligible.
  • There is no doubt that you are a credit-worthy individual in the eyes of the Bank.
  • You have accumulated considerable savings in your Savings Account, and your Bank is aware of this fact.
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Processing An Instant Pre Approved Personal Loan

Customers are generally informed of their eligibility for pre approved personal loans by their lenders. But if you need to get it online and are sure of your disciplined financial transactions, you can approach the Bank directly or check for a pre-approved personal loan online to know your eligibility. Upon receiving confirmation that you may apply for this loan, you may proceed as follows:

  • Visit the nearest branch or the Bank’s website and fill out the application form.
  • Select the loan amount and tenure of repayment.
  • Furnish documents if required (PAN card, income proof, address proof)

In a few hours or days, your account will be credited with the loan disbursed upon verification of these details.

Interest Rates Comparison Of Pre Approved Loans

Most leading Banks and NBFCs (Non-Banking Financial Companies) in India offer pre-qualified personal loans to their eligible customers with a good credit profile. However, the interest rates on the loans may differ from one lender to another. A number of factors determine the approval of an application, such as the applicant’s credit score, income, and so forth.

Listed below is a comparison of some of the major Banks and non-Bank financial institutions in India based on pre-approved loan interest rates, which can be found on their websites.

         Provider Name         Interest Rate
State Bank of India 10.90% onwards
HDFC Bank 11% onwards
Axis Bank 10.49% onwards
ICICI Bank 11.25% onwards
Bajaj Finserv 13% onwards
Kotak Mahindra Bank 10.99% onwards
L&T Finance 11.00% onwards
TATA Capital 10.99% onwards
IDFC First Bank 10.49% onwards
IndusInd Bank 10.49% onwards

Note: The interest rates offered by Banks are subject to change.

Check here to know which Bank offers low interest rates in India: Latest Personal Loan Interest Rates of Banks

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Features And Benefits Of Pre Approved Personal Loans

Zero Documents and Paperwork

As for the initial assessment and evaluation of an individual’s credit history, there is not much paperwork or documentation required by Banks. Considering credibility has already been established, there will be no need for complex or complicated documentation. The Bank maintains a record of your income history as part of its customer database.

Fast Processing

The processing time to disburse the loan could take a few hours or days once the borrower has met all the eligibility criteria. Upon completion of the initial credit investigation and approval of the loan, the loan amount should appear directly in your account within a few days.

No Collateral or Security

The borrower does not have to pledge any collateral or security to secure pre approved personal loans. In either case, this applies regardless of whether the personal loan is instant or not.

Preferential Personal Loan Interest Rates

In order to obtain pre approved personal loans, borrowers must have a good credit history and adequate savings. The lenders, therefore, offer competitive interest rates, which are generally lower than those offered by traditional lending institutions. Compare various Banks and choose one that will work the best for you based on your needs and financial situation.

Flexibility in Repayment

The repayment period can range from 12 to 60 months, and the borrower can choose the repayment period according to his or her convenience.

Offers and Discounts

You can obtain a special interest rate or waive the processing fee from your Bank since you have already established your creditworthiness.

Disadvantages of Pre-Approved Personal Loans

  • There is a limit to the number of days or periods during which pre-approved loan offers are valid.
  • Should any discrepancy be found during the loan application, the loan may be rejected.
  • There is no guarantee that money will be disbursed immediately in the event of a pre approval of a loan.
  • Interest rates may increase. Some Banks may increase their interest rates in order to give you a quick loan. Therefore, it is imperative to stay aware and alert.

Check here: How will I know if my personal loan is approved or rejected?

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Points To Remember

Maintain a High Credit Score

Stay consistent in your repayments and credit card bill payments. Be a responsible customer. It will help you earn instant loan approval with reasonable interest rates when required.

Keep a Tab for Different Intimations

It is better to keep track of these announcements from your lenders regularly. The Bankers make announcements during specific seasons or months.

Do your Homework

Do thorough research on available personal loans from other lenders as well. To make sure that you are getting the best deal, compare interest rates and choose the one that best meets your needs out of the ones available.

Understand Other Charges

If you are considering applying for a pre approved personal loan, you should be aware of the amount of processing fees, pre-payment charges, and pre-closure charges Banks will impose on you.

Easy Pre-approvals With Buddy Loan

There are times in life when you face unpredictable situations that make us need a financial cushion at the ready in the event of unforeseen circumstances. The convenience of fast cash disbursements and no documentation and paperwork associated with pre approved personal loans make life easier if you’re looking for credit and fast cash. These types of quick loans can only be secured if you keep your credit score high and maintain good financial discipline from time to time. Here is where Buddy Loan can assist you with getting a quick loan for a variety of reasons.

Buddy Loan can help you if you need more information or assistance. And get away with your pre approved personal loan in the safest and easiest manner possible.

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Frequently Asked Questions

Q. Can I get a pre approved loan offer anytime?
No. In contrast to regular loans, pre-approved loan offers are usually made available only for a particular period of time, after which they will expire.

Q. Does a pre approval loan require a certain credit score?
As a thumb rule, financial institutions require you to comply with a minimum credit score of 750 or above in order to qualify. A credit score of such magnitude can make it easier for you to receive pre-approval for your loan application.

Q. Are pre approved personal loans safe?
Banks will always be eager to lend them money if a borrower has a good credit repayment history. In essence, pre-approved loans represent ‘loans offered to you’ based upon certain conditions that have been predetermined based on an evaluation of your creditworthiness.

Q. In the case of pre-approved loans, are there any charges involved?
Not necessarily, but pre approved loans may also be subject to certain fees and charges in the same way as personal loans, such as the processing fee, the prepayment fee, the part-payment fee, etc. A lender may offer additional benefits and discounts to certain customers, such as a waiver of processing fees, an EMI holiday for a certain period of time, etc.