When it comes to managing unexpected expenses or fulfilling important financial goals, a personal loan can be a helpful tool. And if you’ve been pre-approved for a loan, it might seem like a no-brainer to accept the offer. However, it’s important to carefully consider the terms and conditions before consenting to the loan agreement. In this blog, we’ll discuss some of the key factors you should take into account before accepting a pre-approved personal loan offer.
A pre-approved personal loan is a type of loan facility that is offered to select customers by various non-banking financial companies (NBFCs) and banks in India. It is an instant loan that requires minimal documentation and does not require any collateral or security. This loan is offered to customers who have a pre-approved loan offer from the lender based on their creditworthiness and repayment history.
The purpose of offering pre-approved personal loans is to meet the urgent financial needs of customers and to decrease the loan disbursal time considerably. The interest rate offered on pre-approved personal loans can range between 10.49% p.a. and 14% p.a. depending on the applicant’s profile. However, the interest rate may vary from lender to lender, and customers must check with the lender for the current interest rate before availing a personal loan.
Pre-approved personal loans are a highly sought-after loan facility that offer several convenient features to eligible customers. These features include:
The loan disbursal process for pre-approved personal loans is lightning-fast. If you’re an existing customer of the bank or NBFC, the loan amount will be credited directly to your account with minimal documentation.
The loan approval process is simple and hassle-free, with minimal documentation required. Customers can apply for the loan online or via a mobile application, making it easier for them to obtain credit when they need it.
Pre-approved personal loans do not require customers to provide any collateral or security to obtain the loan. This feature eliminates the need for time-consuming paperwork and makes it easier for customers to access credit quickly.
The loan amount offered for pre-approved personal loans varies for each individual, based on factors such as their credit history and repayment record. Customers can get the loan amount they need, based on their unique financial requirements.
Pre-approved personal loans must be repaid through Equated Monthly Instalments (EMIs). Customers with an existing account with the lender can opt for auto-debit facilities to pay their EMIs, making the repayment process even more convenient. The standard repayment tenure is 12 to 60 months, depending on the lender.
During and after the disbursal of pre-approved personal loans, lenders may impose various fees and charges on customers, including processing fees, EMI bounce charges, secure fees, outstation collection charges, foreclosure charges, and others. You must carefully read and understand the applicable fees and charges before applying for a pre-approved personal loan.
These loans are typically offered to customers who have a proven track record of creditworthiness and are likely to repay the loan amount in a timely manner. Eligibility for pre-approved personal loans may depend on several factors, including:
The lender considers your credit score to be a crucial element in deciding whether you qualify for a pre-approved personal loan or not. A good credit score can increase your creditworthiness and make you eligible for a pre-approved loan offer from the lender.
Your bank may review your transaction history, including your income and transaction rates, to assess your eligibility for a pre-approved loan. A good transaction history can demonstrate your financial stability and increase your chances of being approved for a pre-approved loan.
If you’ve previously taken out loans and repaid them on time, your lender may pre-approve you for a personal loan based on your repayment history. Similarly, paying your credit card bills on time can demonstrate your creditworthiness and increase your chances of being pre-approved for a personal loan.
If you have substantial savings in your bank account and a steady source of income, you may be eligible for a pre-approved personal loan even if you don’t have a credit record or repayment history.
Before accepting a pre-approved personal loan offer, it’s crucial to consider several factors to ensure you’re making a sound financial decision. Below are some of the major factors to keep in mind:
Pre-approved personal loans can be a lifesaver in times of financial need, providing quick access to funds with minimal documentation and competitive interest rates. However, before accepting a pre-approved offer, it’s essential to consider the loan tenure, pre-payment charges, processing fees, and interest rates offered by various lenders to make an informed decision.
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