6 Key Insights You Should Know About Pre-Approved Personal Loans

Eligibility Criteria

Individuals with good credit profiles are eligible for pre-approved personal loans. Before extending pre-approved offers, lenders consider factors such as –

• Credit score,
• Income,
• Employment type,
• Existing debt obligations,
• Employer’s profile, etc.

Remember, a pre-approved offer is an ‘Invitation to Apply’. Such an offer can be withdrawn during the application process if there are any adverse changes in the customer’s credit score, income, or other relevant factors.

Repayment Tenure

The repayment tenure for pre-approved offers is similar to that of regular personal loans. The tenure usually ranges from 1 to 5 years, with some lenders offering even longer terms. Choose your tenure based on your repayment capacity:-

• Go for a longer tenure if your monthly budget is tight – it lowers your EMI but increases overall interest cost. You can reduce interest costs later by making part-prepayments when you have surplus funds.
• Choose a shorter tenure if you can afford higher EMIs – it helps you repay the loan faster and save on total interest.

Personal Loan EMI Calculator

Whether you’re considering a Rs 50,000 or a Rs 5 lakh personal loan, or even a shorter or longer loan tenure, using a personal loan EMI calculator can help you find the optimal EMI, saving both time and effort.

Processing Fees & Other Charges

The processing fees are usually the same or lower than those charged for regular personal loans, which can go up to 4% of the loan amount. Some lenders may cap or waive the processing fee during special campaigns or festive seasons. Compare the processing fees of pre-approved offers with those of regular personal loans, as such fees constitute a significant proportion of the overall borrowing costs.

Note that missing your personal loan EMIs can lead to penal charges, which can increase your total cost of your loan and impact your credit score.

Time Taken for Loan Processing & Disbursal

Since initial credit checks are already done, loans can be disbursed within hours or on the same day. Individuals with urgent financial needs can check with their current banks or NBFCs about their pre-approved eligibility for personal loans.

Minimal Documentation

Fresh documentation is usually not required for processing a loan application, as the lender already has the necessary KYC documents. This allows for faster disbursal and makes pre-approved loans hassle-free.