Pre-Approved Loan

A pre-approved loan is when the banks approach you directly and want to give a loan without you asking for one. These loans are already approved based on your past track record or relationship with the bank. You may already have a loan, salary account or credit card with the bank. The banks normally intimate you about this loan either through a text message on your mobile phone, by tele-calling or written communication. And if you are interested in availing the loan all you need to do is contact the bank. But these offers come with a cut off date or time till when you can avail the loan. Pre-approved loans are another way where banks do their cross-selling of other products. Like if you have a credit card or salary account based on this relationship banks offer a loan to you. Then you even have a loan with the bank and broaden the relationship

Pre-approved loans are offered on your unsecured and secured loans. Unsecured loans are personal loans and credit cards and secured loans are car loans and even home loans. Banks would give a pre-approved loan on an unsecured or secured loan but it is upto the customer to accept it or reject it. And if accepted there are certain criteria's to be fulfilled.
Banks offer a pre-approved loan on the basis of your track record. For example if you have an existing loan running with the bank, depending on the repayment track record the bank will offer you another loan. Also if you have a salary account with the bank seeing your income and balance in the account they offer a pre-approved loan. Banks normally check your CIBIL score before sanctioning the loan. So after you have approached the bank for the loan then the banks will check your credit profile. This is normally done for credit cardholders. But for a pre-approved secured loan banks check your credit history and the asset. It will check the home you plan to buy or the car for which you are availing the loan. They do their checks first and then sanction the loan if the criteria's are met.

The processing of a pre-approved loan is usually easier and quicker. As the bank already have your credit details and other documents. There is less paperwork involved in a pre-approved loan and hence the process is faster. The interest rate is the same as you would get it from other banks. Sometimes it could be cheaper as the bank can extend the risk factor as you are already a customer with them.

Even if your bank offers you a pre-approved loan it is always better to check with other banks as they may give you the loan at the same rate or lesser. You can use this pre-approved loan to negotiate with other banks and may get a better offer elsewhere. And if your bank has offered you a pre-approved loan it would mean you have a good credit score and a potential customer for the bank.