How to Get a Pre-approved Personal Loan in 5 Easy Steps

In such circumstances, the availability of a Pre-approved Personal Loan offer can prove to be a lifesaver, enabling you to fulfil your financial obligations with minimal stress. You may have doubts regarding the accessibility of these pre-approved offers, assuming they are offered exclusively for a select group of customers. However, this article will elucidate how to get a Pre-approved Personal Loan in 5 easy steps.

What are Pre-approved Personal Loans?

Pre-approved Personal Loans are instant financial solutions exclusively extended to specific customers. This swift loan requires minimal paperwork and lacks the need for collateral or any form of security. To qualify for a Pre-approved Personal Loan, a good credit score coupled with a track record of timely repayments is the prerequisite.

Numerous banks and non-banking financial companies (NBFCs) within India offer Pre-approved Personal Loans. It aims at amplifying the sales of loan products, promptly addressing customers' pressing financial exigencies, and substantially reducing the turnaround time for loan disbursement.

The interest rate for pre-approved loans may differ from bank to bank and typically ranges between 11% p.a. to 25% p.a. Hence, before availing of a Pre-approved Personal Loan, you should make a diligent inquiry into the applicable interest rate.

Much like a regular Personal Loan, a Pre-approved Personal Loan amount can be utilised to address diverse financial needs. Once you receive the funds, you can use them for any legitimate purpose, such as fulfilling your travel aspirations, covering expenses for your desired wedding, purchasing the latest gadgets, consolidating existing loans, or even undertaking home renovations.

Different banks have different requirements to consider customers eligible for Pre-approved Personal Loans. If you are a Pre-approved Personal Loan customer, the lender may have checked the following prerequisites:

• You may have a good credit score.

• You may have maintained a strong transaction history, account balances, and transaction frequencies.

• Timely and consistent loan repayments of your past and/or ongoing loans.

• The bank could be actively monitoring your financial inflows and outflows, aligning them with your creditworthiness.

Click here to download PersonalFN's "Your Definitive Guide to Avail of a Personal Loan in India" for free!

[Read: How to Use a Personal Loan Calculator Effectively A User-Friendly Guide]

[Read: 9 Most Important Questions to Ask Before Applying for a Personal Loan]

[Read: 5 Reasons Why a Personal Loan Can Go Wrong]

[Read: Do Not Make These 11 Mistakes When Taking a Personal Loan]

[Read: 8 Sure-fire Ways to Improve Your Personal Loan Eligibility]

[Read: Is Opting for a Personal Loan Better Than Borrowing From Friends & Family?]

[Read: 8 Effective Strategies to Reduce the Cost of Your Personal Loan]

What are the features of Pre-approved Personal Loans?

1. Interest Rate:

As the lender performs an initial assessment of your creditworthiness, the Pre-approved Personal Loan interest rate could be lower than the rate applicable to regular personal loans. You can calculate your future EMI and total interest outgo using an online Personal Loan Calculator.

2. Loan Tenure:

A Pre-approved Personal Loan requires you to choose a loan tenure, typically ranging from one to five years.

3. Processing Speed:

Thanks to the lender's pre-established assessment of your creditworthiness, Pre-approved Personal Loans often have a faster loan application and disbursement process compared to regular personal loans. Such loans can be availed of within a few minutes. For example, to its eligible customers, HDFC Bank offers a Pre-approved Personal Loan that instantly credits money to their HDFC Bank Savings Bank Account within 10 seconds.

4. Absence of Collateral:

Since these loans come under the category of unsecured loans, Pre-approved Personal Loans do not require any collateral to safeguard the loan.

5. Repayment Schedule:

Throughout the loan term, Pre-approved Personal Loans usually adhere to a consistent repayment plan, involving equal monthly instalments.

6. Minimal to No Documentation:

Given that the preliminary evaluation of your financial standing and creditworthiness is completed before giving you the pre-approved offer, the documentation required for loan approval is either negligible or entirely eliminated.

What are the benefits of availing of a Pre-approved Personal Loan?

1. Lower Interest Rate:

Pre-approved loans typically come with a lower interest rate. The bank's prior assessment of your financial factors like income, savings, account balance, and repayment history instils confidence in your repayment capability, allowing for a more favourable interest rate.

2. Quick Processing:

Because the bank has already evaluated your eligibility and financial history, the approval process for a pre-approved loan is significantly faster than a regular personal loan. This efficiency extends to disbursement as well, making the funds available in a swift manner.

3. Minimum Documentation:

Pre-approved loans are extended to existing customers, resulting in minimal or negligible documentation requirements. This is possible due to the bank's familiarity with your financial profile, streamlining the application and approval process.

4. Online Loan Applications:

When you receive a Pre-approved Personal Loan offer, you can conveniently apply for it online, eliminating the need to visit a physical bank branch. This digital accessibility simplifies the application procedure and saves time for borrowers.

What should you do to get a Pre-approved Personal Loan?

1. Maintain a Healthy Credit Score:

Your credit score plays a vital role in loan approval. A higher credit score (750 and above) reflects better creditworthiness, increasing your chances of loan approval with favourable terms.

2. Manage EMI Burden:

Ensure that your existing EMIs are not more than 40% of your net take-home pay. The lower debt-to-income ratio shows your ability to manage your debt obligations within your income limits.

3. Use Credit Cards Responsibly:

Responsible credit card usage, including timely repayment of monthly bills, helps maintain a good credit history. This, in turn, contributes to a healthier credit profile.

4. Limit Loan Applications:

Applying for multiple loans within a short span can lower your credit score as it indicates you are in desperate need of funds. Hence, it is advisable to be selective and only apply when necessary.

5. Balance Secured and Unsecured Loans:

Having a reasonable mix of secured (backed by collateral) and unsecured loans contributes positively to your credit score. It showcases a diversified and well-managed credit portfolio.

6. Consider Debt Consolidation:

Consolidating your debts can streamline repayments and possibly lower interest rates, improving your overall financial well-being and making it easier to manage your EMI obligations.

7. Avoid Recent Personal Loans:

Not having taken a personal loan in the last six months showcases better financial stability. Frequent borrowing can raise concerns about your repayment capacity.

How to get a Pre-approved Personal Loan in 5 easy steps?

1. Improve Your Eligibility:

You should first check whether you meet the lender's eligibility criteria. This typically involves factors such as a good credit score, a stable income, and a consistent repayment history. If you meet these criteria, you are more likely to receive a pre-approved offer. Follow the steps discussed in the previous point to ensure you meet the Pre-approved Personal Loan eligibility criteria.

2. Receive and Review Offers:

Keep an eye on your email or messages for pre-approved loan offers from banks and NBFCs. Once you receive such an offer, carefully review the terms & conditions of the loan, interest rates, and loan amount to ensure they align with your financial requirements.

3. Apply Online:

If the offer suits your requirements, you can apply for the Pre-approved Personal Loan online. You can apply for the loan through internet banking or mobile app. Nowadays, most lenders provide a link where you can input your details and initiate the application process. This method saves time and avoids the need for a physical visit to the bank.

4. Document Verification:

While pre-approved loans often require zero to minimal documentation, there might still be a need for some basic paperwork, like identity proof, address proof, and income details. Submit these documents online, if requested by the lender.

5. Loan Approval and Disbursement:

Once you have completed the application and submitted the necessary documents, the lender reviews your application. Given that the offer is pre-approved, the approval process tends to be quicker. Upon approval, the loan amount is credited to your bank account.

By following these 5 easy steps, you can get a Pre-approved Personal Loan quickly and conveniently compared to the regular personal loan application process.

How to apply for a Pre-approved Personal Loan online?

1. Log into your internet banking portal and check for any pre-approved loan offers. If you are unable to find it, you can contact your bank or preferred lender to check for the offer.

2. Complete and submit a loan application form. These forms are often accessible on the bank's official website, through branch offices, mobile apps, or upon request via SMS.

3. Determine the loan amount you need and select a repayment tenure as per your requirements.

4. Once the bank's verification is completed, the loan amount will be transferred to your bank account.

Take note that certain banks and NBFCs may request additional documentation if needed.

What Factors Should You Keep in Mind When Applying for a Pre-approved Personal Loan?

1. Time-Limited Offers:

Pre-approved Personal Loans are essentially 'Invitation to Apply' (ITA) offers and come with an expiration date. Hence, you should apply for the loan within the mentioned period to ensure your loan is processed successfully.

2. Understand Associated Charges:

In order to understand the complete financial picture of the loan, you should know all the fees related to the loan, such as the processing fee, prepayment fee, and foreclosure fee.

3. Compare Offers:

Don't settle for the first offer you receive. Different lenders might have varying terms, interest rates, and features for their Pre-approved Personal Loans. Comparing these offers ensures you choose the one that best suits your financial needs and preferences.

What are the documents required for a Pre-approved Personal Loan?

Given that many Pre-approved Personal Loans are extended by banks to their existing customers, additional documentation is usually unnecessary. This is because the bank already possesses your income, KYC, and related information on record. Nevertheless, there are instances, such as when a pre-approved loan is extended to a new customer, where banks typically request:

• Identity proof, such as PAN Card, Passport and AADHAR Card.

• Address proof, such as an AADHAR Card, Driving Licence, and Passport.

• Income proof, such as bank statements and latest salary slips.

Can a Pre-approved Personal Loan get rejected?

Yes, it's important to note that despite being pre-approved, loan rejection is possible. Your application could face rejection if inaccurate documents are submitted or if incorrect information is provided in your loan application. Furthermore, your loan request might also be declined if you fail to meet any eligibility criteria during the verification phase.

Should you avail of a Pre-approved Personal Loan as and when it is offered?

Many individuals opt for a Pre-approved Personal Loan out of curiosity as it can be availed of instantly, typically, within a few seconds! Nonetheless, before deciding to get a loan, it is crucial to evaluate your financial needs. It is advisable to steer clear of opting for loans unless it is truly unavoidable. If your situation is not urgent, it is wise to exercise caution and not rush into obtaining immediate financing, even if it is readily accessible.

In conclusion:

Availing of a Pre-approved Personal Loan is an easy and convenient process that empowers individuals to secure financial assistance efficiently. By adhering to the five easy steps outlined in this guide, you can navigate the application process with confidence. It is essential to recognise the time-sensitive nature of pre-approved offers and apply within the stipulated timeframe. Furthermore, taking the time to compare offers, understanding associated charges, and assessing your financial requirements ensures you make a well-informed decision. Pre-approved loans not only speed up the loan disbursal process but often come with competitive interest rates, providing a swift and accessible solution for various financial needs. By following these steps, you can seize the opportunity to address your financial goals with ease and convenience.

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KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

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