Hela September 21, 2019

Banks usually offer pre-approved loans to its existing customers and that is why minimum or no documentation is required and the process is hassle-free. (Photo: iStock)

“Hassle free experience with minimum documentation, no bank visits, no unwanted calls. Get pre-approved-personal loans with faster disbursal.”

You might have received hundreds of such SMSes or calls from bank executives congratulating you on being only a few steps away from securing a pre-approved loan under your name. So, what is a pre-approved personal loan? Is it worth taking?

What is a pre-approved loan?

Pre-approved loans are mostly unsecured, collateral-free short term loans that any individual with a decent credit score can avail from banks, NBFCs or fintech lenders.

They are not different from normal loans in their nature except that the bank itself is reaching out to you to lend. To put it simply, if you get this offer, it means that your creditworthiness has already been assessed favourably.

Eligibility criteria:

Long standing customers having a decent credit score, good existing bank balance, a substantial savings history, good income and an excellent repayment record are considered eligible for a pre-approved loan.

The eligibility can also be checked through your netbanking account.

Documents needed:

Banks usually offer pre-approved loans to its existing customers and that is why minimum or no documentation is required and the process is hassle-free.

But, if you are not an existing customer of the bank you are applying, the lender can also ask for your 6-month bank statements, last 3-month salary slips, ID proof like Aadhaar, address proof and PAN etc.

Advantages of pre-approved loan

Quick Processing: Since the lender has already checked your creditworthiness, the processing is done quickly–in some cases even within minutes and the loan is disbursed.

Competitive interest rates: Since you are a customer selected by the bank itself, the lender will offer you the most competitive interest rate.

Flexibility of purpose: It does not have any usage barriers or any limitations. You can use the funds for any personal requirements.

Flexible repayment: Pre-approved loans allow you to choose a pocket-friendly repayment tenure. Most of the banks offer 12 to 60 months repayment tenures.

How to apply

After receiving an offer, all you need to do is to contact your bank representative and complete the formalities so that the fund can be transferred to your bank account.

You can also apply online:

1. Login to your netbanking account

2. Click on ‘Loans’ and choose the ‘Pre-approved Loans’ section

3. Click on ‘Apply Now’

4. Select the type of loan from the pop-up and click on ‘Apply Now’

5. Fill the form

Points to remember

a) Note that pre-approved loans are actually ‘Invitation to Apply’ offers and hence are valid only for a certain period of time. The customer needs to apply within that specified time frame.

b) Inquire about pre-payment charges and pre-closure charges.

c) Ask for zero processing fees.

d) Do not forget to compare available features and interest rates.

[“source=livemint”]