Pre-approved personal loans are regularly offered by lenders to their existing customers on the basis of their credit score, monthly income, employer’s profile, etc. Such loans generally have instant disbursal and may also be charged lower interest rates. It requires no collateral security and documentation is minimal.
It means you’re only one step away from getting the personal loan. Before applying for a loan first you need to check the advantages and disadvantages of a pre-approved personal loan.
Pros of Pre-approved Personal Loan
- Speedy processing- You can easily get the loan amount in a very short time due to the fast processing of a pre-approved personal loan. In most cases it happens because the customer is existing, so they are already eligible for getting an offer, you don’t have to use a personal loan eligibility calculator. They will match the given information with the available information. If it is matched they will approve the loan quickly.
- Several discount options available- Since pre-approved personal loans are offered frequently to increase sales, the lenders may award certain offers along with it. It may be in form of a fee waiver, lower EMIs and lower interest rates, and flexible repayment terms. It can help you save a lot of money.
- Loan repayment time is flexible- Getting a pre-approved personal loan can help you get flexible loan tenure on repayment. The financial institutions would trust your creditworthiness because of your past credit performance, which results in flexible repayment options or loan tenure. It can range between 1 year to 4 years. You must note down your repayment date to make consistency in your good credit performance. Use the personal loan EMI calculator to know payable EMIs.
Cons of Pre-approved Personal Loan
- Loan application may be rejected- Lending institutions are not bound to provide you with the loan. Offers only reflect your eligibility. If there would any mismatch is found in your details, the pre-approved personal loan amount will not be credited to your account. Your application may or may not be rejected.
- Chance of increase in interest rate- The interest rates may or may not increase for pre-approved customers. Check the interest rates before accepting their loan offer. It is not mandatory they provide pre-approved loans at low-interest rates, it may be increased.
- Loans terms and conditions- There is a chance of many terms and conditions are available to get these offers. It will put a burden on your shoulders for a long time. Read all terms and conditions very carefully.
- Offer validity for short period- Pre-approved personal loan offers may be valid only for a few days as an exclusive deal. You need to take action fast to avail of these loans. If you’re taking a decision in very less time, so, there are more chances of mistakes.
Fees or charges- Before the final submission of the application take a look at the schedule of fees and charges. Some lenders may charge an additional processing fee, transaction fee, etc., and lay a high penalty for foreclosures and partial pre-payments.