According to the RBI data, personal loans have seen tremendous growth of about 20.4 percentage annually in January 2023. This is due to the quick and hassle-free availability of personal loans. Another contributing factor is pre-approved personal loan offers.
These are offered by various lenders, require minimal paperwork, and are easy to avail. Lenders offer such pre-approved loans as instant credit options to their select customers. Instant pre-approved loan offers are just another variant, and are offered based on your credit score and income.
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Read on to understand more about how you can qualify for such offers, tips for improving your chances of being pre-approved, and how to choose the right pre-approved personal loan for your needs.
Understanding Pre-Approved Personal Loans
A lender extends a pre-approved personal loan based on your financial standing. This happens after the lender reviews your credit score and other financial information. Unlike traditional personal loans, pre-approved loans are provided without a formal application process.
Instant pre-approved loans can help you meet unexpected short-term expenses. The pre-approval process is based on the lender's assessment of your creditworthiness. If you make the cut, you may receive a pre-approval offer outlining the loan terms and conditions.
The instant pre-approved loan has its benefits, some of which are as follows.
- Instant credit: Pre-approved loans are disbursed quickly; you can get funds in no time.
- Attractive interest rates: Lenders offer competitive interest rates, as many such offers are personalised.
- Zero documentation required: Since the lender already has all the necessary documentation, you don’t need to submit any paperwork.
- Contactless loan disbursal: Pre-approved loans can be disbursed online. Physically visiting the bank or NBFC is not needed.
- No collateral or security required: Pre-approved personal loans are unsecured forms of credit, and do not require collateral or security.
Before availing a loan, you must check the current personal loan rates offered by different banks. Comparing interest rates can help you choose the most suitable lender.
Qualifying for Pre-Approved Personal Loans
Getting instant pre-approved loan offers is easy if you meet the general requirements set by the lender. To be eligible for pre-approved personal loans, lenders such as Bajaj Finserv typically check for:
- Timely bill payments
- Income
- Average monthly bank balance
- Credit scores
- Credit history
All lenders will have set criteria, and meeting these terms gives you the best chance for such an offer. In fact, a lender you have an existing relationship with is more likely to offer an instant pre-approved loan.
However, in some cases, you may need to submit basic KYC documents like an Aadhaar card, Voter ID, PAN card or passport, and a bank account statement to get the latest offer. In any case, check if the lender has your latest information before you accept an offer.
In some cases, you may get a revised, more favourable offer. This is more likely if your finances have improved or if your credit score has increased.
How to Improve Your Chances of Getting a Pre-approved Personal Loan
Your creditworthiness is a major factor, and so improving it does help your chances of getting pre-approved for a personal loan. Here are some tips to improve your score:
- Make Timely Payments: Late payments will lower your credit score, so making your payments on time is crucial.
- Keep Credit Utilisation Low: Keep your credit utilisation ratio below 30% of your total credit limit to maintain a good credit score.
- Monitor Your Credit Score Regularly: Check your credit report regularly to identify any errors and address them to maintain a good score.
- Keep Old Credit Accounts Open: A long credit history can improve your credit score, so avoid closing old unused loan accounts.
In some cases, lenders may not extend such offers. Some common reasons for you may not be pre-approved for a personal loan are as follows.
- Poor Credit Score
- Inadequate Income
- Unstable Employment History
- Incomplete Documentation
Choosing the Right Pre-Approved Personal Loan
When it comes to choosing the right instant pre-approved loan, there are several factors you must consider before making a final decision.
- Interest rates:The interest rate is a crucial factor to consider as it determines the total cost of borrowing. Look for a loan offer with a competitive interest rate that fits your budget.
- Fees:Check if the loan offer comes with additional fees, such as processing fees, prepayment penalties, or late payment charges. These fees can add up and increase the cost of borrowing.
- Repayment Terms:The loan's repayment terms should be flexible and tailored to your needs. Consider the loan tenure and monthly payment amount before choosing a pre-approved loan offer.
It is essential to compare different loan offers to choose the best pre-approved personal loan. For example, some lenders offer loan amounts of up to ₹40 Lakhs with a flexible repayment tenure of up to 84 months at an affordable interest rate. However, other lenders may have different loan amounts, interest rates, and repayment tenures.
To select the instant pre-approved loan offer for your needs, evaluate your financial situation and borrowing needs. Then, choose a loan offer that fits your budget and has flexible repayment terms. Additionally, consider the reputation and customer service of the lender before making a final decision.
Pre-approved personal loans offer a convenient and accessible option when seeking a personal loan. By understanding the qualifications for pre-approval, improving your credit score and income, and carefully evaluating loan offers, you can increase your chances of securing a pre-approved personal loan that meets your needs.
Remember to carefully consider the terms and conditions of any loan offer before opting for it. With a calculated approach, an instant pre-approved loan can be an effective solution for helping you tackle financial emergencies affordably and conveniently.
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