Personal Loan vs Pre-approved Loan: In this time of rising prices, everyone requires funds to meet their family and individual necessities. In this scenario, a personal loan may be the preferable choice. There are primarily two categories of personal loans: – Standard Personal Loan and Pre-Approved Personal Loan. There are significant distinctions between these two.
Not required to approach the bank or provide any paperwork for a pre-approved personal loan
Clients are not required to approach the bank or provide any paperwork for a pre-approved personal loan. The bank provides this loan depending on the customer’s current relationship (account, credit score, or prior loan). Clients with a favorable credit score and an excellent repayment record are given priority for this loan. If the customer currently has an existing loan, he can also be presented with a pre-approved loan as a top-up option.
Conventional Personal Loan:
To obtain a typical personal loan, the borrower must approach a bank or non-banking financial company (NBFC) and provide various documents like identity verification, address verification, bank statements, and income proof.
In addition to this, prior to granting the bank loan, the customer’s income, cash flow, credit score, and ability to repay are thoroughly assessed.
The interest rate is also determined by these factors. Borrowers with a solid credit history and the ability to repay receive loans at reduced interest rates. Nonetheless, this procedure requires more time compared to a pre-approved loan.
Advantages of a pre-approved loan:
The bank is already aware of the customer’s financial details. As a result, the loan is authorized and released right away. No additional documents are needed. The bank evaluates the loan using the information that is already on hand. This loan is not secured. In other words, there is no requirement for any form of guarantee or property mortgage.