What is a Pre-Approved Personal Loan, and How does it Work in India?

There are times when you may need extra money to take care of some expenses. In situations like these, getting a pre-approved personal loan is the correct choice. Several banking and non-banking financial institutions offer pre-approved personal loans to customers already engaged with them. 

Such a loan requires minimal paperwork and usually has a lower interest rate. There are two types of loans in India, secured loans and unsecured loans. The former requires collateral, while the latter does not. A pre-approved personal loan is an unsecured loan. This makes it the ideal choice. You may wonder about the details and how you can get one in India. Read this article to know more about it!

What do you mean by a pre-approved loan? 

A pre-approved personal loan is given instantly to meet the financial requirements. It is best for those in need of money on an urgent basis. It is given to loyal customers of banks and financial institutions with a good credit score and timely repayment of loans. It is an unsecured loan offered without collateral. 

A pre-approved personal loan can help customers get loans with minimum documentation. The interest rates are generally low. They differ from one bank to another. Banking and Non- Banking financial institutions use these loans to promote and increase their sales.

What are the features of a pre-approved loan?

A pre-approved personal loan is given at the discretion of the bank or the financial institution you are approaching. The features of a pre-approved personal loan are:

1. Quick disbursal

The loan amount will be disbursed to the account once all the work is done. You being an existing customer of the bank or any non-banking financial institution gives you this benefit. 

2. Less paperwork

Getting a pre-approved personal loan is a hassle-free process, and the paperwork involved is significantly less. The documentation is light and easy to manage.

3. No need for collateral

It is an unsecured loan. So there is no requirement for collateral or security. The loan is given instantly. 

4. Flexible repayment tenure

The repayment is made monthly by EMIs. The standard time of repayment is 12-60 months. This makes the entire process of repayment very flexible.

5. Additional charges

Certain charges need to be paid during the tenure of a pre-approved personal loan. These are processing fees, security fees, etc. These charges vary from institution to institution.

What are the eligibility criteria to get a pre-approved personal loan?

The eligibility criteria are basic to avail of this facility. The following criteria need to be met:

• You should have a relationship with the bank as a customer.
• Your credit history must be remarkable.
• If you have taken any loans previously, they should have been repaid on time.

Sometimes the banks provide these loans to new customers. Having enough savings in your account and a regular source of income can get you this loan even without a credit history. Pre-approved loans do not require a very thorough assessment compared to a regular loan facility.

How can one get a pre-approved loan?

As already mentioned, getting a pre-approved personal loan is an easy process. Here are some steps to follow while applying for a pre-approved loan:

• The first step to getting a loan is checking whether you are eligible for a loan. You can check the eligibility with the bank or via your net banking account system. 
• The next step is to fill out a loan application form. This can be done either offline or online. You can submit the forms to the bank or through the net banking app.
• You can choose the amount you need for the loan. You can also choose the repayment tenure according to your suitability.
• Once the bank has completed the entire process of verification, it will transfer the loan amount to the bank account.

There can be a chance that the NBFCs or the banks require additional documents. These could be salary slips, employer details etc. You can provide them with that if needed.

What is the maximum amount of pre-approved personal loan you can get?

The maximum limits are different for each bank and financial institution. The maximum limit for a few banks like HDFC Bank, SBI Bank, Axis Bank, and Bajaj Finserv is Rs. 25 lakh. Moreover, banks like ICICI offer up to Rs. 50 lakh as their maximum limit. 

If you want a pre-approved loan, ensure that you have excellent records. It would be best if you had a high credit score, a good repayment record, regular income, and a decent amount of savings in the account. 

Always check the charges levied during and after the pre-approved personal loan. It is best to research and compare different features of banks and financial institutions.

What are the benefits of a pre-approved loan?

The features of pre-approved loans are beneficial. Therefore, the benefits of a pre-approved personal loan are as follows:

1. Fast funding

When you need money urgently, these loans can be of great help. The amount will be disbursed into your account as soon as the eligibility and verification are done. 

2. Low-interest rates 

It helps if the bank knows you are eligible and have a good track of repaying loans with a remarkable credit history. They will offer competitive interest rates. It can be a great advantage to getting low-interest rates on loans.

3. Scope for negotiation

Negotiation is a method for the bank to promote. So you can negotiate with the bank. You can adjust the terms and conditions strategically.

4. Minimal documentation

If you are already the bank’s customer, you need not worry as the bank already has your details. This makes the paperwork much less and the process relatively easier. In most cases, you just have to fill out the form. The bank will do the rest.

5. Choose the repayment tenure.

The repayment tenure is flexible in the case of a pre-approved personal loan. Depending on your financial situation, you can choose between 12-60 months.

Conclusion

Banks provide pre-approved personal loans to customers to increase their sales. Further, the banks also provide significant discounts on interest rates, EMIs, etc., on pre-approved offers.  All this can prove to be advantageous if chosen rightly. A pre-approved personal loan can be the way to get the financial support you need. You can avail of a personal loan from banks and non-banking financial institutions. 

Piramal Finance is an Indian financial services company making its foray into retail lending. This includes personal loans. Personal loans can be used for any personal work. Piramal Finance understands this. It provides hassle-free personal loans with zero pre-payment and foreclosure charges. If you are looking for a personal loan, contact Piramal Finance now.