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A Quick Guide to Understanding Pre-Approved Personal Loans
- Published on: 22 Aug 2024
A pre-approved personal loan can give you quick access to funds, helping you manage your planned or unplanned needs effortlessly. You must be financially flexible in the modern world. You can adapt to most changes or variations throughout your financial journey with these loans. Read on to understand these loans better.
A pre-approved personal loan is a borrowing tool. Lenders provide you with this facility if you fulfil certain financial prerequisites. Lenders study your financial information in detail before pre-approving you for a loan.
Loan pre-approval includes the review of various financial facts about you. Some of these are:
A lender concludes whether you are eligible for a pre-approved loan based on this assessment. If approved, in some cases, lenders may even sanction a pre-approved personal loan without documents.
Also Read: Instant Loan Without Documents
This is because of your existing relationship with the lender and the fact that you have repaid your dues on time. After approval, you can get the loan amount based on the decided loan terms.
With a good credit history, you can get lower interest rates. You must understand that pre-approval does not guarantee you a loan. You may even get an instant pre-approved loan from the lender that you already have an account with.
A pre-qualified loan is a loan offer that the lender makes to you at your request. To get a pre-qualified loan, you have to submit your personal and financial documents to your lender. The lender will then assess your credit standing and consider whether you are eligible.
Check Personal Loan Eligibility Criteria
To better understand these two loans, read about the major differences between the two.
| Parameter | Pre-qualified Personal Loan | Pre-approved Personal Loan |
|---|---|---|
| An in-depth review by lenders | Sometimes | Always |
| Required information | Current income, debt, assets, credit documents | Valid job, identity, address, income documents |
| Purpose | Helps lenders understand if you are a potential borrower | Lenders check your creditworthiness before extending a pre-approved offer |
| Process details | It may take from a few minutes to a few hours to get updated information about your application | You can use the website or mobile app of the lender to check every step and its status. |
A pre-approved loan comes with excellent features and advantages that help you get stress-free access to funds.
Loan pre-approval leads to quicker loan approvals. That is because the lender has already assessed your financial background.
You do not need to struggle with filling out several forms and submitting loads of documents. The lender already has the required data, thanks to the pre-approval process.
Most lenders will list out all the charges related to your pre-approved loan, if any. This drops the risk of you succumbing to any hidden costs.
With a great credit history, lenders may offer you a lower interest rate with your personal loan.
These loans are usually dispersed very quickly by most lenders.
Enjoy a smooth loan application process, as you are already a pre-approved applicant.
Also Read: How To Improve Your Credit Score
Before you utilise the pre-approved loan facility, you need to remember that this loan offer:
To ease the pre-approval process, focus on maintaining or improving the following.
Pre-approved personal loans are a great financial tool. These loans can help you in times of need. Loan pre-approval can also help you get funds to make smart purchases and investments after proper consideration and planning.
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You can get pre-approved for a personal loan with the right credit track record and by being financially responsible.
Different lenders maintain varying pre-approval standards. However, having a good credit score and history, a regular income, investments and savings is the best way to fulfil most lenders’ eligibility criteria.
Pre-approved personal loans are not guaranteed loans. The issuer may conduct further checks to assess your repayment capacity. The loan application may be declined if your repayment capacity is not deemed to be satisfactory by the issuer.
Pre-approval signifies that a lender is satisfied with the checks it has conducted towards your financial standing. It can help you get the maximum sum at favourable interest rates.
