Last Updated on February 17, 2024 by Ali Hamza
The personal loan application may appear to be a daunting task that must be done if you are in the market for emergency funds. You should be aware of what is CIBIL score and how a low score can affect your chances of getting a personal loan deal. If you want to avoid such inconveniences, you can choose pre-approved loans, which come with reasonable interest rates.
Do you have a track record of timely repayment history? The good news is that you could be eligible for a pre-approved personal loan if the financial institution knows what is CIBIL score of a particular individual. A pre-approved personal loan is exactly what it sounds like the lender has already approved your eligibility to borrow funds without your need to apply.
What are my chances of getting Pre Approved Loans?
Banks and other financial institutions typically pre-approve borrowers who have a solid repayment history and a high credit score and fall under CIBIL score range. Furthermore, such loans have a short processing period, do not demand collateral, and have a flexible repayment term.
The interest rate offered by the bank fluctuates and is often between 10.49% p.a. and 14% p.a., depending on your credit history, income, and repayment tenure. If you are unsure, you can use an online personal loan EMI calculator to compare the EMIs of normal and personal loans to know what rate of interest you will get based on the CIBIL score range you fall under.
If you have never missed or failed an EMI or credit card payment, you may be eligible for pre-approved loans. On the other hand, if you’ve had difficulties making payments in the past, you can take a variety of practical steps to improve your chances of qualifying for this type of loan. Such as limiting your credit utilization ratio and avoiding taking out new loans until your existing debts are paid off.
Criteria for Eligibility
Despite the fact that this is a pre-approved loan, you may still be required to meet the following requirements to be eligible for a pre-approved loan.
The following are the eligibility requirements:
- Clean credit history:
- History of repaying loans
- A current customer of the bank to which you are applying for the pre-approved loan.
What is the Maximum Amount of a Pre-Approved Personal Loan I can get?
Each bank and NBFC has different maximum limitations for pre-approved loans. Certain banks, such as HDFC Bank, SBI Bank, Axis Bank, and Bajaj Finserv, have a standardized amount of up to Rs. 25 lakhs provided you fall into their CIBIL score range. Furthermore, many banks, such as ICICI, have a maximum restriction of Rs. 50 lakhs for pre-approved loans.
How Pre-Approved Loan differs from a Regular Personal loan?
Now that we understand how pre-approved loans function, let’s look at how they differ from conventional personal loans.
Eligibility: With regular personal loan, it is a must for an individual to know what is CIBIL score because their application is based on that. Banks check and verify whether the loan applicant has a long tenure of employment with salary slips/income proof. Pre-approval, on the other hand, necessitates less stringent evaluations however, still requires you to fall within the acceptable CIBL score range. To apply for the loan, you only need a good enough credit history and three months of job status. Customers with no credit history can apply for a loan that is pre-approved based on their income and savings history.
Documentation: Pre-approved loans require little to no documentation and paperwork to be granted. Regular loans, on the other hand, necessitate more thorough investigation of the borrower, and it is a time-consuming process involving numerous papers.
Loan Disbursement: Typically, a pre-approved loan is disbursed within a few minutes. A regular loan, on the other hand, has a lengthier disbursal time ranging from a few hours to several days.
Does it make sense to choose a Pre-approved Loan?
The following are some important advantages of pre-approved loans:
- Quick funding: Pre-approved loans are ideal if you require immediate funding to fund an emergency financial requirement. The loan will be transferred to your bank account the same day it is approved.
- Competitive Interest Rates: People who fall under the good enough CIBIL score range are eligible for pre-approved loans.
- Documentation Requirements: As the lender has already assessed your financial credibility, you only need little evidence to process a pre-approved loan.
Pre-approved Loans Have Some Drawbacks
Pre-approved lending schemes have a number of disadvantages, including:
Comes for a short period: Pre-approved loans have a short term of validity. If you get a notification that your loan is approved, you must act quickly to take advantage of it, or the deals will be changed or cancelled.
Bank’s Decision: The bank is not obligated to credit the loan until they know what is CIBIL score of an individual and all the papers are confirmed.
Doesn’t guarantee: While pre-approval indicates that you are qualified for the loan, it does not ensure fast disbursement.
What is the process for getting a pre-approved loan?
Here is a Step-by-Step Guide to Obtaining Pre-Approved Loans Online. The specific procedure may differ from one financial institution to another. However, here’s how you may obtain a loan for which you’ve previously been pre-approved.
- Log in to the bank’s or lender’s website or mobile application.
- Enter any necessary information (such as your name, PAN, date of birth, and so forth).
- Check to see whether you qualify for pre-approved loans.
- If you qualify, you can apply for the loan provided it can fulfill your emergency needs.
- Fill out an online application form.
- Choose a loan amount and a repayment period that works for you.
- Once the bank has completed the verification process, the loan amount will be transferred to your bank account.
However, keep in mind that some banks and NBFCs may require additional paperwork. These documents include your most recent three-month salary slip, bank account statements, employment information, KYC information (PAN and Aadhar), and employee ID card.
So we are Saying,
For last-minute financing needs, pre-approved loans are the ideal alternative. It is simple, efficient, and requires only strong financial discipline. In addition, the bank includes additional benefits such as low-interest rates, and processing fee exemption. One must understand that an excellent credit history is important for getting pre-approved for a loan. One has to make sure they pay their bills on time to increase their chances of getting a pre-approval loan.
If you have always been a good borrower with a clean credit history and fall under the excellent CIBIL score range, you could be qualified for an instant pre-approved loan with almost any bank.
