Pre-approved personal loans are instant loans provided by digital lenders like Rupeeredee, Moneytap, StashFin, etc. or NBFCs (non-banking financial companies) and banks to specific customers. Lenders choose such customers depending on their past credit record, repayment potential and credit utilisation ratio. Read on to understand what’s a pre-approved loan, its advantages, and how the lenders’ factor in the eligibility for this loan option based on critical pointers.
Details of pre-approved personal loans are –
| Loan proceeds | Up to Rs 20 lakh |
| Rate of interest | Between 9.90 per cent and 45 per cent per annum |
| Foreclosure charges | 0 – 5 per cent of the outstanding principal |
| Repayment tenure | Up to 5 – 7 years |
Benefits and features of the pre-approved or instant loan –
Here are a few advantages of pre-approved loans –
Instant loan disbursal –
If you hold a pre-approved credit deal, it means your lender has approved predetermined loan proceeds for you post considering your past credit record, income, and other parameters. All you require doing is choose preferred loan proceeds on the pre-approved loan deal to place a loan application. Loan proceeds on pre-approved loans are typically credited to your account in just a few minutes.
No documents are required –
You can avail a pre-approved loan deal without the requirement of submitting any document. It means the lender already has reviewed your credit profile as well as customer history at the backend before providing you with an instant or pre-approved loan.
Flexibility in repayment –
You even have the flexibility of selecting a repayment tenure on a pre-approved loan deal. Generally, personal loans come with the highest repayment tenure equaling five-year years. However, a few lenders may offer a higher repayment tenure of as high as seven years. You can choose the loan tenure according to your convenience.
Zero security or collateral is required –
Personal loan whether pre-approved or regular is an unsecured credit option. This means you do not require pledging any security to avail a personal loan, unlike secured credit options like auto loans or gold loans. This clubbed with zero restriction on the funds’ end usage, make the personal loan a preferred credit option.
Competitive rate of interest –
Lack of security generally makes lenders charge a slightly higher rate of interest for unsecured credit options like personal loans, or loan against credit cards than secured credit options. However, financial institutions still try to offer the lowest personal loan interest rates after reviewing your credibility and other eligibility criterion.
How can you avail a preapproved personal loan?
- You must first check in with the lender whether you qualify for a pre-approved loan. Once done, you can sign into your Internet banking to review if you are being offered this option.
- In the case you qualify, fill out to submit the loan application form. You can get the form from the branch of the concerned lender or on its site or mobile application.
- Choose the required loan proceeds and preferred loan repayment tenure.
- Your lender would credit the loan proceeds post successful authentication of your loan application.
What are the documents required for availing a pre-approved personal loan?
Though you are unlikely to provide any additional personal or income documents while applying for the pre-approved loan, you may want to keep in hand specific basic documents required by the lenders for authentication. These documents are –
- Aadhaar card
- PAN card
- Income documents
What’s the eligibility parameter for availing a pre-approved personal loan?
Eligibility parameters for availing a pre-approved personal loan can differ as per the lender you have selected. Mentioned here are some of the crucial criteria –
- You must be an Indian citizen
- You must hold an excellent loan repayment record
- Your income must be more than the lender’s minimal income need
- You must fall between the age range of 21 and 60 years
- You should be a self-employed or salaried individual
- A few lenders may provide pre-approved loan deals just to the existing customers
Compute your pre-approved loan EMI
Computing your loan EMIs beforehand can assist you to ascertain the loan repayment affordability and ideal repayment tenure. You can compute your loan EMI manually using a very simple formula –
Loan EMI = [P X R X (1 + R) ^ N] / [(1 + R) ^ N – 1]
Here, P stands for a principal constituent, R stands for interest rate and N refers to the repayment tenure in months. However, computing manually the loan EMI can be a tedious procedure. Thus, it would be way more convenient and reliable choice to use an online loan EMI calculator for accurate outcomes in just seconds instead of manually computing the personal loan EMI and overall interest constituent. Using the online calculator, you can also make relevant changes to the inputs to compute the outcome as per your preference. Once you have computed the preferred figures as per your suitability and repayment potential, you can approach the concerned lender and negotiate to provide you with the same deal. Doing so would help you avail the deal of your choice and even save money that otherwise would have gone towards repaying unnecessary interest costs on the loan.
Pre-approved loan rates of distinct financial institutions –
| Financial institutions | Rate of interest (per annum) |
| Bajaj Finserv | 13 per cent per annum onwards |
| IDFC FIRST bank | Between 10.49 per cent and 23 per cent per annum |
| IndusInd bank | 11 per cent per annum onwards |
| Tata Capital | 10.99 per cent per annum onwards |
| Kotak Mahindra bank | 10.25 per cent per annum onwards |
| IDFC FIRST bank | Between 10.49 per cent and 23 per cent per annum |
| Axis bank | 10.25 per cent per annum onwards |
| ICICI bank | 10.25 per cent per annum onwards |
| HDFC bank | Between 10.25 per cent and 21 per cent per annum |
| State Bank of India | Between 9.60 per cent and 13.85 per cent per annum |
| Punjab National Bank | Between 7.90 per cent and 14.50 per cent per annum |
| NAVI | 9.90 per cent and 45 per cent per annum |
