Have you ever received a SMS or call from telemarketing executives congratulating you for being sanctioned for a preapproved personal loan. It is so alluring that you can get the funds by just completing a few formalities at the nearest branch office.But wait till you start feeling so special that you are among the privileged few who the bank has chosen. This is just a marketing strategy that many banks are adopting these days to meet their targets of the loan disbursal amounts.Banks identify people with a high credit score, income stability and good payment history and offer such advantages to these customers. If you have a savings account and a credit card of a particular bank and you’ve been regular with the payments of dues then you fall in the low risk category and there is a high probability that banks will try to cross sell such products to you. Since the banks already have insight into your finances, the salary you draw, the liquidity in your account and your repayment track record;they do an initial analysis of your credibility and identify your eligibility for a particular loan amount.
The procedure of preapproved personal loans is similar to regular personal loans where you need to submit the required documents to get the disbursement. The question is do these pre-approved loans offer you any special benefits? Well you can use these preapproved loans to your advantage in many ways.
1. Lower interest rates - In case you are preapproved, you can expect to have a lower personal loan interest rate than other customers. Since banks considered your eligibility on the basis of your good credit history and sufficient cash flows you can bargain for a lower rate. Banks won’t mind offering you a discount since you are a low risk customer who is not likely to default on payments.
2. Negotiation - It is the bank that has chosen you as an ideal candidate and wants you to take the loan and not vice versa. This gives you a greater negotiating power than the bank. You will have an upper hand to discuss the terms and conditions and tweak them in your favour. You may even ask for relaxation of processing fees and other charges.
3. Better options - You can even use the preapproved loan to your advantage to get better personal loan interest rates from other banks. The fact that you were eligible for a preapproved personal loan signifies that you have good financial credentials and any bank would be ready to offer you loans at competitive personal loan interest rates.
4. Fast processing of application - In case of a regular personal loan banks take some time to check the CIBIL score and assess the credibility of an individual to evaluate an application. Hence paperwork and credit approval takes some time. But in case of pre-approved loans since banks have already done background checks and credit assessment,the processing time involved is much less.So if you need immediate cash for travelling or for a medical expense you will have an edge. You can use this loan and get immediate disbursement. This will also save you from borrowing money at a very high personal loan interest rate in case of an emergency.
Even though there are several benefits of a pre-approved personal loan it does not mean that you should take the loan just because it is offered to you. Remember every loan comes at a cost and you should stay away from it unless you really need the funds. Take it only for essential requirements. Don’t get tempted to avail these loans to spend on unnecessary things which you can do without. Consider your repayment capacity and be sure that your cash flows can take the burden of the additional EMI before signing on the dotted line.
About Credit Sudhaar
Credit Sudhaar is India's first credit and finance platform for consumers which provide various credit and financial tools such as free credit score, credit monitoring, credit score simulator among others. Credit Sudhaar also provides a wide range of analytical assessments to the users helping them to have an in-depth understanding of their credit health. More importantly, not only does Credit Sudhaar extends guidance on how to improve CIBIL score but it also extends personal loan for low cibil score apart from facilitating access to various loans and credit facilities based on current credit health.