A Complete Guide to Obtaining a Pre-Approved Personal Loan

Life can take unexpected turns at a moment’s notice. Are you stuck with an unexpected expense or a financial emergency that your savings account cannot handle? A personal loan is your answer. Personal loans are unsecured borrowings that can be used for emergencies. This means you won’t have to put up any collateral to get a personal loan. Applying for a loan is simple, time-efficient, and doesn’t mess with your CIBIL credit score.

Applying for such a pre-approved personal loan has never been simpler. Offline and online, the process takes minutes, and the rest of the task is completed by the lender. Once a pre-approved loan has been verified by your lender, the rest of the process is pretty smooth.

This article tells you everything you need to know about pre-approved personal loan offers and how to apply for one online or in person.

What is a pre-approved personal loan?

A pre-approved personal loan is an approval granted by lenders when they have accessed your finances and are convinced that you have a clear record of timely repayments. People who have already been screened for the first step of the process are given pre-approved loans, and the last step is a quick loan disbursement.

A personal loan can be classified as a short-term credit loan or an unsecured loan. It can be accessed by anyone and from any bank. You can obtain a personal loan for any legal purpose without having to provide collateral or a security deposit. It is almost like buying a product via EMI. The fixed monthly payments take care of themselves, and you are saved from a financial emergency.

Main features of pre-approved personal loans

• Loans that have already been approved are given out quickly, and the process goes even faster for returning customers.
• Pre-approved loans are paid back through equated monthly instalments (EMIs).
• The average repayment period of pre-approved loans is one to five years.
• Pre-approved personal loans can be obtained without any security or collateral, such as a car or a property.
• Financing with pre-approved loans is hassle-free and requires minimal documentation.
• Pre-approved loans are based on the bank records, finances, credit histories, and repayment records of the borrowers.

Eligibility for a Personal Loan

Lenders consider a variety of factors when considering accounts for pre-approved personal loans. Along with a flawless banking history and repayment profile, they also look at your current employment status, the field of your work, and your job security.

Here are the leading factors considered by lenders when offering pre-approved loans:

1. Credit Score: The credit score is the primary point of consideration for nearly all personal loan lenders. Your credit score should be optimal and lie somewhere between 720 and 750.
2. Average Account Balance: Your average monthly account balance must be more than the minimum requirement of the bank. The minimum amount is set by the bank and depends on where you live, your average monthly spend, your family responsibilities, and how much you owe in loans, credit cards, and EMIs.
3. Credit Card Payment: Lenders will ensure that your credit card payments for the last 12 months have been addressed on time. Credit card bills also reflect the spending habits of the borrowers, which is useful information for the lender.
4. Monthly Income: Borrowers are expected to have a stable monthly income and a secure job. Lenders will look into your salary slips for the last quarter to access your monthly income. The desired figure varies for each financial institution. However, you must meet the baseline figure to qualify for a pre-approved loan offer. Your job profile and employment status will be reviewed by the lender. 

The Process to Get a Pre-approved Loan

Now that you have a pre-approved offer, the next step is to meet the eligibility requirements for a loan by filling out forms and completing a few formalities.

To apply for a pre-approved loan online, visit the bank’s website or get in touch with their sales representative.

Here’s how to apply for a pre-approved loan offline:

• Visit your nearest bank and scan for any pre-approved loan offers.
• Fill out a loan application form and submit it to the bank.
• Pick the desired loan amount in INR and the tenure of the loan.
• Submit the following documents.- Proof of residence in the form of an electricity or water bill- Bank account statements- Proof of identification- Permanent Account Number (PAN) card- Copies of Aadhar card- Salary slips for the previous three months​
• Verify the documents and submit them to the bank. 

Interest and Charges on Pre-approved Loans

While procuring a pre-approved personal loan, borrowers can expect a wide range of charges. While some of these charges, like the monthly interest, are fixed, the rest of the charges, such as outstation collection charges, secure fees, and foreclosure charges, depend upon the financial institution. 

Here are all the charges on pre-approved loans.

1. Interest Rate: The interest rate is the monthly or annual amount charged on the principal amount. Because the market for pre-approved loans is competitive, the charges vary from one lender to the next. Borrowers can expect the pre-approval rate to lie somewhere between 10.75% and 14%.
2. Processing Fee: The processing fee is the one-time fee charged by the lender while addressing the loan application.
3. EMI bounce charges: EMI bounce charges are contingency fees that are charged in the event of a payment lapse. 

Final thoughts

Unexpected money problems are a common occurrence for Indians. For people with stable incomes, a pre-approved personal loan is the best way to mitigate a financial collapse. We hope the daunting topic of personal loans is digestible and understandable to you by now.

You can now apply for a pre-approved personal loan online as well. Experts at Piramal Finance are here to guide you on how to get pre-approved loan offers and a personal loan in times of need.