Digital personal loans are widespread these days. According to a Reserve Bank of India study, as of 2020, digital lending accounted for 75% and 10% of banks and non-banking financial companies’ (NBFCs) total assets, respectively.
So, there is no doubt that you might have, at least once, received an email or a call inviting you to apply for a pre-approved personal loan. Besides, the various benefits of a digital personal loan, such as quick funding, minimal documentation, and online processes, make it an attractive option for many people. If you want to take advantage of a pre-approved loan, here is everything you must know about this specific loan type.
What Is A Digital Pre-Approved Personal Loan?
Let’s break down digitally pre-approved personal loans into three parts.
Firstly, they are short-term and collateral-free, meaning they are unsecured loans. Anyone with a decent credit score and repayment history can avail themselves of such loans.
Secondly, they are pre-approved. A lender extends the digital personal loan option to borrowers with good credit. So, if you receive this loan offer, your creditworthiness has been found positive by the financial institution. You can apply for a digital personal loan during the offer period, and it will be approved instantly.
Finally, they are digital. You can submit the necessary documentation online to get pre-approved if you receive an offer.
You can use a digital personal loan for various purposes. For instance, you can use it to renovate your home, consolidate debt, or fund a medical procedure. In addition, they are easier to access, are more convenient, and have affordable interest rates. So, pre-approved personal loans are an ideal option for emergencies.
4 Must-Know Things About Digital Personal Loans
#1 – The Eligibility Criteria For A Pre-Approved Loan
Lenders offer pre-approved loan options to potential borrowers who meet specific benchmarks. Generally, a financial institution will pre-approve you for a digital personal loan if:
- You have a good credit score.
- You can clear outstanding bills quickly.
- You have a steady source of income.
- Your transaction rates and bank balance are satisfactory.
- You don’t have any default EMIs.
- You have a record of repaying previous loans, credit card bills, etc., on time.
Do you want to apply for a pre-approved loan? If yes, consider checking your eligibility through your net banking account.
#2 – Documents Required To Apply For A Digital Personal Loan
Lenders offer a pre-approved loan to potential borrowers who they find eligible for a personal loan. It means they already have access to your KYC and financial documents. So, there are fewer chances that you will need to submit a lot of documentation. In most cases, you may not have to submit any documents.
But what if you aren’t an existing customer of the financial institution? Then you will have to submit the following when applying for a digital personal loan:
- 6-month bank statements
- Last three months’ salary slips
- A cancelled cheque
- KYC documents like an Aadhaar card, passport, or PAN card.
#3 – Applying For A Digital Pre-Approved Personal Loan
Your digital personal loan application process begins after you receive the pre-approval offer. The good news is that the process is straightforward. Here are a few simple steps to apply for a pre-approved personal loan online and get quick disbursal.
- Login into your net banking account or the lender’s mobile app.
- Head to the pre-approved personal loan section.
- Read through the various pre-approved loan offers and their details.
- Complete the application form by choosing a repayment period and loan amount.
- Wait for the funding to credit your bank account after successful verification.
Are you pre-approved for a digital personal loan? You can contact your bank representative to get answers to your queries. Or, you can log into your net banking account to access this information.
#4 – The Benefits Of Digital Personal Loans
- Quick Processing and FundingWith a pre-approved loan, the lender has already assessed your eligibility. After successfully verifying your application, the funds will quickly be disbursed to your account. Hence, being pre-approved serves as a safety net for emergencies.
- Flexible Loan Period Since the loan was extended to you by the lender, you have the upper hand in choosing a loan repayment tenure. Usually, loan periods range between 12 and 60 months. So you can choose a timeline that fits your repayment capabilities the best.
- Competitive Interest Rates Interest rates of digital personal loans are often lower than what you would be charged without pre-approval. Since you are pre-approved, the lenders are confident that you are a trusted borrower. Hence, they become sure to offer you competitive interest rates.
- Minimal DocumentationExisting customers don’t have to worry about a lengthy documentation process. The bank or NBFC already have your KYC and financial details. So, the documentation you must provide will be minimal.
- Better Financial PlanningWhen you apply for a loan, you can’t be sure it will be approved. And in case of rejection, you will be left struggling with financial planning. A pre-approved loan makes financial planning more manageable by giving you a clear idea of how much funding you can borrow.
- Discounts And OffersSometimes, your lender will offer additional benefits, such as processing fee waivers, EMI holidays, and lower interest rates. Such perks can help you significantly reduce your overall debt in the long run.
The benefits of pre-approval are numerous. Hence, you might be tempted to opt for the first digital personal loan offer that comes your way. However, just like your lenders, you should check the credentials of prospective lenders. This will help you stay safe from dodgy sources that use attractive offers as a facade to lure victims.
Look for trustworthy lenders. These institutions offer unique features and better deals, like Piramal Finance. For example, a digital personal loan from Piramal Finance offers the following benefits.
- Club income for higher loan eligibility
- Enjoy zero pre-payment and foreclosure charges
- Choose pocket-friendly monthly EMIs
- And more.
Check the personal loan webpage to learn more and apply for pre-approval.