Loan approval is a very crucial step in loan processing. This step is followed after loan application and precedes the final disbursal. Many times, you get a message such as you have a pre-approved loan at low interest rates. So, what is a pre-approved loan? A pre-approved loan is a loan that has already been approved by the lender without you applying for it. It is a product offered by banks and financial institutions to customers, who have a good repayment history. Certain financial providers also offer pre-approved loans to customers who have not taken any loan at all but have a good flow of income, as well, as credit card repayment record. However, there is a catch to it. The offer for pre-approved loans has a time limit involved.
Pre-approved loans have two categories: unsecured loans and secured loans. Personal Loan and credit card fall in the category of unsecured Loans while car loans and home loans are examples of secured pre-approved loans.
What are the advantages of pre-approved loans?
The biggest advantage of pre-approved loans is that the waiting time for loan processing is much lesser. This means that you do not have to wait for a long time before buying your dream home or car.
A pre-approved loan helps you to plan your finances better. When you already have a pre-approved loan, you know a definite amount that the financial lender will sanction. Therefore, if you are buying a new house, it becomes easy for you to search a house within a budget once you know the amount of money that you have to make as a down payment and the money that can be availed of as a loan.
In case of home or car loans, a pre-approved loan gives you a better negotiation power. When you have a portion of loan already sanctioned, you can strike a better deal with the builders or car dealers.
Certain pre-requisites that are required before opting for pre-approved loans are as follows:
1. Do you really need the loan?
The first thing you need to do is to do some reality check. You need to ask yourself whether you really need the loan. Do not be lured just because the loan is pre-approved and is offered at a low interest rate. No matter how convenient it is, the loan still comes at a cost. So, if you do not need it, it is better not to opt for it just because it is a part of an offer or available at an attractive rate.
2. The exact amount of loan needed
If you really need the loan, you must decide the exact loan amount that you need. The lenders offer the amount of pre-approved loans based on your cash flow, repayment of credit card bills, and utility bills, among other aspects. However, you must only take the amount of loan that you require and not the amount that is being disbursed because it is you who has to service the loan.
3. Recheck the interest rates
The pre-approved Bajaj Finserv home loans charge an interest rate that is at least 1% to 2% lower than the normal rate of interest. However, you should not blindly get into an agreement before verifying the market rates. You must check the interest rate offered by other lenders and then make an informed choice. Another thing, that you must check is the nature of the rate of interest especially in case of home loans. The loan can be fixed or floating. Hence, you need to choose a rate as per your preference.
4. Documentation is an integral part
Documentation is an important process for any loan, whether pre-approved or not. Even for pre-approved Bajaj Finserv Personal Loan, you will be required to submit some documents based on which, verification will be conducted. There may also be certain prior checks needed for car or home loans. In case there is even a minor mismatch of facts, the lender might cancel your pre-approved loan.
Finserv MARKETS offers pre-approved loans to all its existing customers. You can check your personal loan eligibility on the online customer portal and avail your pre-approved loan today!
Also, read about personal loan process.
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