The comprehensive guide to Pre-approved Loans
Getting a pre-approved loan means that you’re eligible to get a loan for a particular amount of money. Though this doesn’t guarantee the sanctioning of your loan, it lets a seller know that you’re well-equipped to make a purchase and that you’re not in the market to waste time.
You may be surprised to know that most people don’t know enough about pre-approved home loans and pre-approved personal loans. So let’s uncover the hidden truth behind pre-approved loans in India
What is a Pre-approved Loan?
A pre-approved loan is essentially a sanction given by a bank or financial institution stating that a borrower is eligible to get a certain amount as a loan. A pre-approval certificate is valid for a limited period of time. You can apply for pre-approval with almost any reputed lender. Bajaj Finserv, for instance lets you apply online for Loans and you can get your Loan approved within minutes of applying on their site.
The requirements for a pre-approved home loan are almost the same as those for a regular home loan. However, they differ slightly from lender to lender. One disadvantage of pre-approved loans is an additional expenditure in the form of a non-refundable pre-approval fee, which you need to pay on top of the regular loan-processing fee. Some myths about pre-approved loan
How do Lenders Give Pre-approved Loans?
After paying the fee and submitting your application, the lender will check your financial credentials to ascertain whether you’re eligible for a loan and how much you’re eligible for. A good credit score is essential for pre-approval. Keep in mind that pre-approval is usually given only to people with excellent financial histories and high credit scores.
Why Should You Get a Pre-approved Loan?
Getting a pre-approved loan is definitely advantageous for any borrower, but only if you can utilise the pre-approval certificate in time, and if the pre-approved loan amount is enough to cover your costs. Here are few of the benefits of getting a pre-approved loan.
- Lower Interest Rates – Most of the time, a pre-approved loan comes with a slightly lower interest rate when compared to a regular loan. If you’ve got good financial credentials, you may even be eligible for discounts on the interest rates and get a much better deal than you expected.
- Quick Processing – Since the lender has already verified your credentials to give you a pre-approval, getting your loan approved and disbursed becomes exponentially easier. Once you submit your disbursal form, a final verification of documents is done and your loan gets approved in a jiffy. If you’re looking for fast approvals, you can opt for financial institutions like Bajaj Finserv, who offer near-instant approval with their online loans.
- More Negotiating Power – A pre-approval certificate gives you a big advantage when you go out into the market and negotiate with sellers. A seller knows that you’re a serious buyer and are capable of arranging funds much faster than someone who doesn’t have pre-approval.
As you can see, pre-approved loans give you an edge, not just as a borrower but also as a buyer. However, always remember that once you’re pre-approved, you need to make a decision within a limited period of time. If your certificate expires, you need to apply for pre-approval again. And the more you apply for pre-approval or for a loan, the more your credit score drops and with each subsequent application your chances of getting pre-approved only reduce.
To avoid this, make sure you know exactly what you plan to do with your pre-approval when you apply. So when you do get your certificate, you can use it to your advantage and exploit the power of pre-approval to the max.