A personal loan is a short-term loan that can be used for any legitimate purpose without the need to pledge any form of collateral or security.
Obtaining a personal loan is not a daunting task anymore. There is no need to wait for hours in long lines, fill out complex documents, or provide any guarantee. In addition, the loan terms become more affordable when you become eligible for a pre-approved personal loan.
What is a pre-approved personal loan?
When the lender feels a borrower is creditworthy and has a clean track record of repaying his dues, the former guarantees a loan to the potential customer. Being granted a pre-approved offer means you have already passed the initial approval process and are guaranteed by the lender to process your loan considerably faster.
Factors influencing your eligibility
- Having a good credit score
- Timely payment of outstanding bills
- Ensuring continuity during payment of loan EMIs
- Backed by a steady and stable income
- Creditworthiness signifies the risk involved in lending funds to the borrower
- Maintaining funds well above the average monthly balance as specified by your bank
However, even though your personal loan is pre-approved, you need to fulfil some minimal formalities involved. Sanction of the loan is dependent on the successful verification of the necessary documents.
Additional Read: Improve CIBIL score
Documents to be submitted
- Bank statement
- Pan card
- Salary slip of the past three months
- Identity proof (preferably Aadhaar card)
- Address proof
Advantages offered
- Negotiation power: You can leverage the loan offer to negotiate for better terms and conditions. You can bargain for better opportunities like extending the tenor, increasing the loan amount, etc.
- Quick processing: Since the lender is extending the offer, they must already have enough proof regarding your track record. It will result in less documentation and speedy disbursal of your loan.
- Competitive interest rates: As the lenders are already assured of your creditworthiness, they are willing to provide affordable terms on pre-approved offers than other modes of borrowing.
Additional Read: CIBIL score range for a personal loan
Disadvantages involved
- These offers are time-bound. So, avail it before the offer expires.
- The lender might revoke the offer if the minimum requirements are not met. You need to fulfil the required formalities and submit the necessary documents.
- Compare interest rates and available features before borrowing.
- Before you agree to the terms and conditions, keep a watchful eye on the charges associated with the loan offer.
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