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    YOU ARE HERE:   Home News Business Personal Finance What is a pre-approved personal loan and how to qualify for one?

    What is a pre-approved personal loan and how to qualify for one?

    06 January, 2025 | 16:05 IST

    Lenders, both banks and non-banking financial companies (NBFCs), have been coming out with a wide range of loan offers to meet the needs of borrowers across income categories. The lenders are offering pre-approved personal loans based on the credit profit and income levels of the borrowers. These exclusive offers are provided by banks and NBFCs to their existing customers and new potential borrowers.

    Let’s take a look at how the pre-approved personal loans work and how to qualify for them.

    Table of Contents

    Understanding pre-approved personal loans

    A pre-approved personal loan is a type of instant loan offer provided to select customers by banks and non-banking financial companies (NBFCs). The eligibility for such loans is determined by factors like your credit history and repayment track record. What sets them apart is the ease and speed of the application process, as you are already deemed eligible.

    How to apply for a pre-approved personal loan?

    Applying for a pre-approved personal loan is simple and convenient.  Here’s how to avail the loan offer:

    • Verify your eligibility: Check with your bank or log in to your net banking account to see if you have any pre-approved loan offer.
    • Access the loan application: Click on the Apply Now button available with the pre-approved loan offer. Alternatively you can visit the lender’s branch.
    • Submit the documents: On reviewing your offer, fill out the application form and upload required documents such as ID proof, address proof, salary slips and the past 3-6 months’ bank statements.
    • Verification process: The bank or NBFC will review your application and documents. Note that some lenders may request additional documents like your employer’s details, employee ID card and e-KYC compliance.

    Eligibility criteria for pre-approved personal loans

    Pre-approved loans are offered to existing customers and new borrowers, who meet certain criteria.

    • Credit history: A spotless credit history is vital.
    • Credit score: A good credit score, preferably above 750, is a requirement.
    • Past repayment record: A consistent track record of repaying debts is important.
    • Monthly income: Proof of a stable source of income that fulfills the minimum income criteria

    Benefits of pre-approved personal loans

    Pre-approved personal loans offer a range of benefits that make them an attractive option for borrowers seeking quick and hassle-free access to funds.

    • Quick disbursal: One of the most significant advantages of a pre-approved loan is the speed of disbursal. Once the application process is completed the funds can be credited to your bank account within a few minutes to a few hours.
    • Minimal documentation: Since the bank has already evaluated your financial credibility, pre-approved loans require less documentation than traditional loans, making the process more efficient.
    • Lower interest rates: Pre-approved personal loans are offered to customers with a strong credit history, often resulting in lower interest rates compared to standard loans.
    • Flexible loan tenures: The repayment terms for pre-approved personal loans are flexible, ranging from 6 months to 3 years, depending on the lender and the loan amount.ALSO READ: What is the maximum and minimum tenure for personal loans?

    You can apply for  personal loans through digital lending platforms like Moneycontrol app and website. Moneycontrol, in partnership with its seven lending partners offers access to personal loans up to Rs 15 lakhs. It’s a completely paperless process and the interest rates start at as low as 12% per annum. Based on your credit profile, you may also be eligible for a pre-approved loan offer.

    Pre-Approved Personal Loan vs. Regular Personal Loan

    Understanding the differences between pre-approved and regular personal loans can help you make an informed choice.

    Pre-Approved Personal Loan

    • Eligibility: Requires less stringent assessments. A clean credit history and at least three months of employment are usually sufficient.
    • Documentation: Involves minimal paperwork or may require no documentation at all.
    • Disbursal time: Funds are typically disbursed within minutes, making it ideal for urgent needs.

    Regular Personal Loan

    • Eligibility: Banks conduct thorough checks and verification of the applicant’s employment status, income proof and other financial details.
    • Documentation: More detailed documentation is needed, involving multiple checks and a stringent verification process.
    • Disbursal time: The process can take even days, making it less suitable for last-minute financial emergencies.

    Why opt for a pre-approved personal loan?

    Pre-approved personal loans are the go-to option for borrowers needing immediate funds. Their fast processing, minimal paperwork and competitive interest rates make them an attractive choice. Lenders often offer additional benefits such as lower processing fees, waiver of certain charges and flexible EMI plans. But it’s crucial to assess the terms and conditions before accepting any offer.

    Here’s what to take into account:

    • Interest rates: Ensure you are aware of the interest rates and compare them with market rates to confirm you are getting the best deal.
    • Additional fees: Be mindful of any processing fees or hidden charges that may be applicable.
    • Loan amount and tenure: Choose a loan amount and tenure that best fits your repayment capability.

    With the advent of technology, instant loan apps have changed how we access loans in India. These apps, available on smartphones, streamline the process of applying for a personal loan, including pre-approved personal loans. They often feature an easy, entirely digital application process, allowing for quicker loan disbursals, sometimes within minutes. Overall, pre-approved personal loans are a convenient, efficient way to meet urgent financial needs.

    Based on your credit score and income, you can avail loan offers for an amount up to Rs 15 lakhs from seven lenders via the Moneycontrol app and website. The process is  100% paperless and disbursal is instant.

    Disclaimer

    This piece/article was written by an external partner and does not reflect the work of Moneycontrol's editorial team. It may include references to products and services offered by Moneycontrol.
    Fintech

    About the Author

    Fintech

    Stay updated on the latest personal finance trends, with a focus on products like credit cards, credit score, personal loans, fixed deposits, and more

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