What are Pre approved personal loans: Advantages, Documents

What are Pre approved personal loans: Have you ever received an email or phone call from your bank where it says “Congrats, You are our lucky customer that you have won

Raju Choudhary

Pre approved personal loans

What are Pre approved personal loans: Have you ever received an email or phone call from your bank where it says “Congrats, You are our lucky customer that you have won a pre-approved loan of XXX amount.” Similarly, while leaving the ATM, after finishing your transactions, you would see a message popping up on the screen that says “Congrats, you are eligible for a pre-approved personal loan, visit our nearest branch to avail it immediately”. Pre-approved loans have become so popular these days. However, is it worth availing it? Let’s discuss it here.

What is Pre approved personal loan?

A pre-approved personal loan is an offer made by your bank by which the banker agrees to extend a personal loan of a certain limit subject to fulfillment of certain criteria as decided by the bank.  Before offering you any loans, banks will check your credit history by analyzing the inflows and outflows of your bank account to assess the repayment capacity. If they find your credit history very good, they may send you a message saying ‘you are eligible for a pre-approved loan’. But it does not mean a guaranteed sanction.

The only difference between a pre-approved personal loan and normal personal is the time taken by the bank to disburse the loan amount. Since the initial credit checks are performed by the banks before offering you, once you opt for it along with the required documents, it will be sanctioned within few days.

What are the advantages of Pre approved personal loans?

Quick processing:

In case of a normal personal loan, it takes much time for the banks to review your credit history before saying yes or no to your loan application. Unlike this, all the credit checks are done by the bank before a pre-approved personal loan is offered to you. So, the overall processing time is very less compared to a regular personal loan.

No collateral:

In case of personal loans, one does not require to keep any collateral security with the bank for getting the amount disbursed.

Relatively lower interest rates:

Since the banker has already reviewed your credit history and is satisfied with your transactions history, he is making you the pre-approved offer. So, the rate of interest offered to you in the case of pre-approved loans would be relatively lower than the standard personal loan interest rates.

Scope for negotiation:

In case of a regular personal loan, it’s the customer who walks into the bank asking for a loan. But the same is the other way around in the case of pre-approved loans. As the banker is the one who reaches out first, there is some scope for you to negotiate with to see if he can further reduce the interest rate or one to two EMI holidays, etc.

What you must keep in mind?

Time limit:

Pre-approved personal loans generally come with a time limit. One can avail the loans only within these time lines. Once the offer period is lapsed, you can not avail the loan. So, those applying in the last the minutes may not read the terms and conditions thoroughly.

Costs involved:

When it comes to loan processing fees and application charges, Pre-approved loans are similar to normal personal loans. Though the interest rates are relatively lower, one would get no concession in processing fees unless he has an impeccable credit history.


One must thoroughly read the fine print of the loan document before going ahead with the pre-approved loan. When it comes to documentation these are no different from normal personal loans. So, care must be taken while submitting the required documents. Any discrepancy with the bank records may attract the chances of loan rejection at the last moment.

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