Many people wait for pre-approved personal loan offers. Once they learn that others have received such offers, they often contact their bank’s customer care to inquire about their eligibility.
But what exactly are pre-approved loan offers? What benefits do they provide? How can you qualify for these offers? Let’s explore this topic in detail.
Emails, App Notifications, and SMS
Many individuals receive pre-approved loan offers through various channels such as emails, app notifications, SMS, and WhatsApp messages.
Upon receiving these notifications, those needing financial assistance often consider taking out a loan. Some banks offer discounts on processing fees associated with these loans, while others may waive the fee altogether.
Typically, customers with a strong credit score, such as a good CIBIL score, are offered pre-approved loans at lower interest rates.
What is a Pre-Approved Loan?
As the name implies, a pre-approved loan is a loan offer that a bank or non-banking financial company (NBFC) has already approved for you.
This means the bank or NBFC has thoroughly evaluated your profile and determined your eligibility for the loan based on various factors.
After reviewing your KYC documents, credit score, loan repayment history, and income sources, the pre-approved loan offer is sent to you. Consequently, these loans are sanctioned quickly with minimal documentation.
Benefits of a Pre-Approved Loan
Low Interest Rate: Pre-approved loans often have lower interest rates. The terms are more favorable since these offers are extended to individuals with a good financial track record. Additionally, the processing fee may be waived or reduced.
No Documentation Required: Most banks process pre-approved loans without requiring new documentation. Since the bank already has your KYC records, and if you have previously borrowed from them, they will also have your income details on file.
Instant Sanction: A pre-approved loan is immediately sanctioned. The borrower can easily decide on the loan tenure and EMIs (Equated Monthly Installments). Once approved, the funds are quickly deposited into the borrower’s bank account.
How to Obtain a Pre-Approved Loan
Receiving a pre-approved loan is at the discretion of the bank or NBFC. To improve your chances of being offered one, consider the following tips:
- Increase your credit score to between 700 and 750 or higher.
- Make timely payments on existing loans and credit card bills.
- Avoid applying for multiple loans and credit cards simultaneously.
- Ensure that your loan repayments constitute less than 36 percent of your income.
By practicing good financial discipline and following these guidelines, you will significantly enhance your chances of receiving pre-approved loan offers in the future.