Pre-approved loans are instant personal loans that are offered by banks and NBFCs to select customers. Lenders select these customers based on credit history, their business relationship with the lender and repayment capacity among other factors.
This blog talks about what parameters banks set while selecting customers while offering pre-approved personal loans.
Features and Benefits of Pre-Approved Personal Loan
Here are some of the benefits of pre-approved personal loans:
1. Instant Disbursal
Pre-approved loan offer suggests that the concerned lender already approved a pre-defined loan amount. All you need to do is select your preferred loan amount within the pre-approved offer threshold and apply. The loan amount would be credited to your account within seconds.
2. Zero Documents Required
You can get a pre-approved loan without documents. The lender has already checked your credit profile and customer history at the backend.
3. Repayment Flexibility
You have the flexibility to choose the loan repayment tenure. Personal loans usually come with a tenure of 5 to 7 years. Select the repayment tenure as per your convenience.
4. No Collateral Required
Personal loans are unsecured loans. You don’t need to pledge collateral to get a personal loan.
5. Attractive Interest Rates
Lenders usually offer competitive interest rates on personal loans. This is done to compel the target customer to take the loan. However, some lenders can charge higher interest rates if they figure out you’re desperately looking for a loan.
How to Avail a Pre-approved Personal Loan?
You can follow the given steps to apply for pre-approved personal loans from your bank or any NBFC:
Step 1: Check in with your lender (bank or NBFC) whether you are eligible for a pre-approved personal loan. You can log in to your net banking account and check it for yourself as well.
Step 2: If you are eligible, fill out and submit the application form. You can get this from the lender’s office or on their website/ app.
Step 3: Select your required loan amount and repayment tenure.
Step 4: Your lender will credit the loan amount after successful verification of your application.
Documents Required for Pre-Approved Loans
You don’t need to provide any document to avail of a pre-approved loan. However, keep these IDs in handy in case your lender asks:
Eligibility criteria for pre approved loans vary from one lender to another. Here are some general criteria:
You have to be an existing customer of the bank or NBFC.
You must be a citizen of India.
You should have a good repayment history.
You must be within the age bracket of 21 and 65 years.
You must be a salaried individual or self-employed.
Calculate your Pre-approved Personal Loan EMI
Calculating your EMIs beforehand will help you decide your loan tenure and manage your finances accordingly. It will help you to be sure about the loan repayment plan as well.
You can calculate your EMI manually with a simple formula:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Here, P is the principal amount, R is the rate of interest and N is the number of months or tenure.
However, it is quite evident that manual EMI calculation can get hectic and leaves room for error. To avoid such hassles, you can use an online personal loan EMI calculator. You just have to enter the loan amount, rate of interest and loan tenure to get the EMI estimate within seconds. This will help you save time and get accurate results.
*This table is used for educational purposes only.
Things to Consider Before Applying for Pre-Approved Personal Loans
Consider asking the bank or the NBFC about the processing fee.
Pre-approved personal loans are valid only for a certain period of time as they are an Invitation to Apply (ITA). You must apply within that time period to avail a pre-approved personal loan.
Compare the interest rates and processing fees of other pre-approved personal loans.
A pre-approved personal loan is a collateral-free borrowing option that can help secure funds at competitive interest rates from your bank.
If you have a good credit score and are already an existing customer of a bank, you can get a pre-approved loan within minutes. However, pre-approved loan offers could be valid only for a certain period of time.
Q1. Can banks decline your pre-approved loan offer?
Ans: In case your submitted documents cannot be verified successfully for any reason, your pre-approved loan application might be denied. However, if you apply for a personal loan from Navi, your digital verification happens instantly and since there is no hassle of uploading any documents, the loan approval would not be denied after it has been digitally approved by Navi’s technology-driven application.
Q2. Does pre-approval guarantee a loan?
Ans: No, a pre-approval can never guarantee a loan as incomplete verification of the documents provided might cancel the application.
Q3. Can a pre-approved loan be used for family marriage purposes?
Ans: A pre-approved loan is a type of personal loan. Therefore, it is a multi-purpose loan that can be utilised for any purpose whatsoever. Even a personal loan from Navi can be used for any purpose.
Before you go…
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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