Complete Guide On Pre-Approved Personal Loans
18 Jul 2022
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If you need money urgently, you may consider taking out a collateral-free and unsecured Personal Loan. You can choose the Personal Loan amount and wait for the lender to confirm the eligibility, while the final approval process may take time. However, sometimes lenders notify you that you are eligible for a Personal Loan, even if you don’t apply for one. Such loans are known as Pre-approved Personal Loans. Read on to learn more about these loans.
Pre-approved Personal Loans - An Overview
Pre-approved Personal Loans are instant Personal Loans that lenders offer their existing customers based on their credit worthiness. When you repay your debts on time and have a good income, the lender offers a set amount, which you can borrow as a Personal Loan. Banks also provide Pre-approved Micro Personal Loans of up to Rs 50,000 to finance offline and online purchases. When you apply for a Pre-approved Personal Loan, the lender credits the loan amount to your Savings Account within minutes.
Pre-approved Personal Loans are different from your regular Personal Loans. In the case of the latter, you can decide the required loan amount, which the lender approves based on your eligibility. However, for Pre-approved PL, the loan amount is pre-set.
Eligibility For A Pre-Approved Personal Loan
An excellent credit score and stable monthly income are the prerequisites to get a Personal Loan. Plus, if you are a long-standing customer of the bank with a sound financial record, you may be eligible for Pre-approved Loan offers. Maintaining sufficient account balances also enhances your chance of securing a pre-approved loan.
You can check Pre-approved Loan eligibility criteria on your mobile and internet banking platforms. You can also contact your relationship manager to assess your eligibility.
How To Increase Your Chances of Obtaining an Instant Pre-Approved Personal Loan
- Maintain a high credit score: Your credit score reflects your debt repayment capabilities. Maintaining a consistently high credit score of 701+ can help you qualify for the loan.
- Keep a low debt-to-income ratio: Your debt-to-income ratio is the ratio of your gross debt to your gross income. Ideally, your EMIs should be less than 1/3rd of your income to be considered for the loan.
- Maintain a working relationship with your bank: Your existing relationship with your bank, coupled with your good financial management record, increases your loan acquiring abilities.
Advantages Of Pre-Approved Personal Loans
- Shorter processing time: Banks disburse pre-approved Personal loans in the borrower’s accounts within a few minutes to a couple of hours.
- Flexible repayment terms: Lenders see you as a retainable customer; therefore, they are more likely to offer flexible repayment terms.
- Attractive interest rates: Pre-approved Personal Loans come with competitive interest rates leading to pocket-friendly EMIs.
- Minimal paperwork: As an existing bank customer, the lender already has your details. This reduces the paperwork required to obtain a loan, and you may only need to submit scanned copies of your income proof documents.
- Multipurpose loan amount: There are no end-use restrictions once the lender disburses the loan amount. You can fund medical expenses, vacations, weddings, etc.
What documents should I submit while applying for an instant Pre-approved Loan?
Since Pre-approved Personal Loans are offered to existing bank customers, documents are not required. The lender has your KYC information in their records. However, in some cases, the lender may ask for income proof, KYC proof (Aadhaar, PAN, Voter ID) and a cancelled cheque.
Can I increase the Pre-approved Personal Loan amount?
You can apply for Pre-approved Loans online, but the loan amount is pre-set. However, you can speak to your lender and enhance the approval limit if you want a higher loan amount.
Can my instant Pre-approved Personal Loan get rejected?
Yes. A Pre-approved Loan does not indicate the bank’s guarantee to sanction your loan. The lender can reject your loan if you furnish incorrect information or if the lender finds errors during the verification process.
What is the validity of the Pre-approved loan offer?
The validity differs from person to person. Lenders offer this loan for a specific period, after which the offer expires.
Apply for Personal Loans with Bank of Baroda
Pre-approved Loans are helpful when you need funds urgently. If eligible, the lenders will disburse the loan amount within minutes. With Bank of Baroda, you can enjoy instant Pre-approved Personal Loans of up to Rs 5 Lakh at competitive interest rates based on your eligibility. Other features include zero processing fees and instant disbursal of funds. The bank also offers Pre-approved Micro Personal Loans of up to Rs 50,000, which you can obtain instantly to pay for online expenses and offline purchases. Call our toll-free number 1800 258 4455 / 1800 102 4455 or head to your nearest Bank of Baroda branch for more details.
Know How to Avoid Hidden Charges in Personal Loan
When you find yourself in a financial emergency, a Personal Loan can be a boon. You can use funds from the loan to pay for all kinds of emergencies and planned expenses. But, like every other loan, Personal Loans come with certain unavoidable costs like interest rates, processing fees, GST, etc. While lenders inform you about these costs upfront, they mention other additional charges in fine print under the terms and conditions section of the loan agreement. Here’s a breakdown of all possible Personal Loan charges you must know.
Gold Loan vs Personal Loan - Which is Better & Why?
A home not only provides a roof over your head, but also doubles up as an investment. Your property can be sold for money at some point in the future. It can also function as collateral for a loan. Home loan is one of the best ways to finance the purchase of your dream flat or house. A home loan helps you safeguard your savings and gives you all the required flexibility to repay the cost of your property with comfort and ease by the way of EMI.
Now, there are so many options of home loans available out there. Choosing just one among all these can be quite confusing. To help you get the best option, here are a few home loan tips that can prove helpful.
1. Check your CIBIL score
Home loans are typically of high amounts and long tenures; thus, they can only be given to individuals who have a good credit history. The minimum home loan credit score required by most of the banks in India is ranges between 650-750. Furthermore, your CIBIL score is directly proportional to the loan amount you are eligible for. This means that having a higher CIBIL score helps you procure loans of higher amount. Generally, having a CIBIL score of 750 and above is considered ideal for procuring a good and substantial value of a home loan. If you check your CIBIL score and find it to be below 650 or just at par with 650, it is better to work on increasing your score before applying for a home loan. Having a good CIBIL score can also help you procure a loan at a relatively lower interest rate.
It is recommended to check your CIBIL score every 3 to 6 months. This will help you keep track of your creditworthiness and devise a strategy to increase your score.
2. Start saving for a down payment
It is important to plan your finances and save up for the down payment before initiating your application for a home loan. This is, perhaps, the best home loan advice that anyone can give you. Lenders typically require you to pay 10% to 30% of the total purchase value of the house or property as down payment depending on your loan amount.
With increasing expenses, it can be quite difficult to save for your home loan down payment. However, making small changes in your monthly budget can ensure that a portion of your income is put aside in a savings account/Investment account etc. to build a corpus for the down payment.
3. Get your financial documents in order
When you take a home loan, you will be required to provide your lender with certain documents such as your recent salary slips, ITRs, and bank account statements, among other paperwork. It helps to keep these documents ready in advance so that you do not have to rush at the eleventh hour to find what you need.
The list of documents required for a home loan can vary between lenders. The documents required can change slightly depending on whether you are salaried or self-employed. Hence, it is better to check with the lender about the records that are required by them. You can easily get a list of required documents by visiting the lender’s website or by calling them up directly.
4. Use a home loan EMI calculator
Understanding your EMI payments is one of the most important home loan repayment tips to keep in mind. Calculating your monthly EMI payments before applying for a home loan can help you avoid taking on debt that you cannot afford to repay.
EMI calculations are dependent upon the interest rate charged and tenure of the loan among many other factors; hence, EMIs are not that easy to calculate manually. Fortunately, you can use the lender’s home loan EMI calculators online to get an idea of the loan amount that you can afford to borrow.
5. Select the right type of home loan
There are many different types of home loans offered by every lender. Bank of Baroda offers its customers different types of home loans including top up loan, home improvement loan, and a home loan takeover scheme, among others. Each type of home loan offers different benefits to borrowers. Hence, it is better to compare bank loans and choose the right home loan that best suits your needs.
When taking a home loan, you can also choose between a fixed interest rate home loan or a floating interest rate home loan. While a fixed interest rate loan will have a constant interest rate throughout the loan tenure, the floating interest rate will see the interest rate change as per the market.
6. Compare the different home loan offers
The cost of procuring a home loan varies between lenders too. When selecting a home loan, you should consider the interest rate charged, home loan processing fees, application fees, technical valuation charges and other such expenses before starting your application process.
To get the best home loan in 2022, do make sure to compare the different loan offers and the other ancillary costs that are associated with borrowing. This research will help you make a smart choice. Remember that a home loan is debt that you take for a long term – generally between 20 to 30 years. So, you would want to pick the best loan provider who fulfils your financial needs for peace of mind.
7. Stay connected with your lender
After you submit your loan application, the lender may require some additional information from you before processing it ahead. Giving quick responses to the lender will help you get the loan amount disbursed swiftly.
It is also imperative to stay in touch with your lender throughout the loan tenure. This will help you build trust with the lender and get the timely help if needed.
8. Keep your credit score maintained during the loan processing period
Lenders typically check your credit score before accepting your loan application. However, they can also pull up your scores again before sanctioning the loan. This helps them ensure that you are a creditworthy individual and are consistent in repaying your debts. Hence, do not get lax on your payments after the lender has accepted your home loan application. Rather, pay more attention to your credit card bills and ensure that they are paid on time. It is also better to avoid applying for new loans until your home loan is sanctioned. This will help you maintain your credit score.
9. Read all the loan related documents carefully
It is particularly important to understand the different terms and conditions of the home loan before signing the documents. Ensure that you go through the documents and get comprehensive knowledge of what you are signing up for. You can contact your lender and ask them for any help you need in understanding the fine print.