If you are planning to take a loan, then this article is for you. In life, we often need to raise more funds to meet many types of needs; in such a situation, taking a loan from the bank is considered a better option. However, the bank checks your credit history and CIBIL score before giving a loan. On that basis, you are given a loan. But there is also a loan for which you do not need to apply. The bank itself offers you a ‘Pre-approved Loan’ from the front.
However, pre-approved loans are offered by the bank to customers who have a better credit report or CIBIL score and have the ability to repay the loan. Let’s know how a pre-approved loan is different from a regular loan and what are its benefits.
What is a pre-approved loan?
A preapproved loan is a loan for which customers do not have to apply. These loans are offered by the bank. All banks have their own conditions for pre-approved loans, on the basis of which they are issued. The bank can offer pre-approved loans to its customers whose credit score and sources of income it knows. The bank identifies such customers and offers them this loan.
How is it different from a regular loan?
When you apply for a regular loan, the bank first takes your financial information. On that basis, you are given a loan. Whereas in the case of a pre-approved loan, the bank already has all the information related to you. The amount of the regular loan, the rates of interest charged on it, etc. are told by the bank after the review of your application, whereas in the pre-approved loan, you are given this information in advance.
Benefits of Pre-Approved Loans
If you are offered a pre-approved loan from a bank, then you can accept it if needed. In such a situation, it becomes easier for you to raise funds, and money is arranged on time. The biggest advantage of a pre-approved loan is that you do not have to make rounds of the bank for a loan, nor do you have to do any paperwork.
At the same time, when you apply for a regular loan, it negatively affects your credit score, while your credit score is not affected if you do not accept a pre-approved loan. Many banks often offer pre-approved loans to customers who pay credit cards on time and repay previous loans.
