We are sure, you must have received an email or a call, claiming that you are lucky applicant you have won a pre-approved personal loan of a certain amount, from multiple banking institutions in the country. So is this a good option for you, if you are planning on availing a loan? Should you see this as a sign from God to the nearest bank around your house and apply for a loan.
What is the pre-approved loan?
A pre-approved loan is a kind of loan, which the bank is ready to give you till a certain limit, which is obviously subjected based on if the applicant is able to fulfill all the pre-decided criteria of the bank. Usually in pre-approved loans banks have already tested your waters, checking your monthly financial inflows and outflows and applicants repayment capacity by calculating his/her all liabilities and credit score.
However, despite the sound of it, these loans don’t guarantee sanctions, as the bank purely works according to the verification and authentication of the applicant, based on his/her relevant documents. It basically follows the same structural procedure as of personal loans, but at a higher speed.
Pre-Approved Personal Loan Advantages
Unlike the basic personal loan, pre-approved are sanction at a much faster rate, it is also easily disbursed without any extensive waiting period. Since the bank already sees you eligible for a certain amount and has a track record of your financial stability, the time taken in its verification is required much less compared to any regular bank loan procedure.
This is basically the biggest selling point of a pre-approved loan. Most banks offer an exclusive low-interest rate for these loans, after checking the repayment capacity of the user, to enroll more and more customers in their program. Personal Loan Interest Rates are higher compared to the interest of a pre-approved loan, so I suggest you should check your e-mail for a pre-approved loan offer before applying for the basic personal loan.
Power to Negotiate
If you are planning on applying for a pre-approved loan, then this is the most important thing that you should keep in mind. Bank leverage their pre-approved loan candidate the freedom to negotiate better for conditions and terms. Since the bank is already willing to give you the loan, you freely bargain and avail better opportunities and enjoy the power that you have over the bank in this situation.
Documentation is Necessary
While banks have already dug deep into the financial aspect of your life, before offering you this pre-approved loans facility. They will still require the applicant to submit all the documents like any other personal loan procedure, to run down a proper verification and authentication test. Documentation is considered of utmost value in loan procedures any discrepancy with them might lead to the cancellation of your loan offer. So, ensure to collect all your identification and financial documents before applying for the loan.
Time Bound Offer
Pre-Approved loans fall under ITA (Invitation to Apply) category and are valid until a specific period of time only. Only the customers who apply within the given time will be seen eligible for the loan and all the other benefits it brings. So, don’t think too much as you might be running out of an existing offer right now.
Pre-approved loans have considerably the lowest interest rate in the market; however, it does come with its own additional expenses, which are mandatory. For instance, the applicant needs to pay a certain sum to the bank as a processing fee, to officially become eligible for this offer. This is no doubt one of the best ways of availing a personal loan, but you can’t avoid the additional charges that the bank puts on this offer.
It is always better to research and study then fall for anything that is said to you by the banks. A little loan assessment can really help you in landing the best offer. However, don’t avail pre-approved just because of the offer. Make sure that you really need the money before applying for any loan. Be it high-interest rate or low, a loan is a form of debt and an additional expense, which shouldn’t be applied for without any reason.