If you have a clear record of loan repayments, your bank might call you to offer a pre approved personal loan. For instance, recently a bank customer received a call from his bank. The banker offered him a preapproved loan of Rs.200,000 However he had paid off his previous personal loan taken for 2 years.

Moreover bank was offering this pre-approved loan at a lower interest rate and the loan would be available within the nest 48 hours.. He was just asked to resubmit some documents.

But the question arises what is being shown simple and good, is it really so or something else? Should we accept this offer or check for pros and cons. It is better to take advice from a financial expert so that we don't make big mistakes.

Types of pre approved loans

Usually bank offers pre-approved personal/home/car loan to people with clear loan repayment history. In case you have prepaid your earlier loan amount then also you can be offered this loan.

Sometimes banks offer pre-approved loans to their own customers even if they have not taken a singleloan, subject to certain conditions such as cash inflow and transactions in their salary accounts. In case of credit card holders all payments have been cleared. However banks set a time limit for the acceptance of such loans.

The pre approved loans can be categorized into two types - unsecured and secured. Under unsecured pre approved loans comes personal loans and credit cards whereas the secured loans include car loans, and also home loans. Before accepting the offer you must have a clear idea about certain things.

Firstly do you really want a loan or are you accepting the offer because it has been offered to you? At times people make such mistakes without thinking on it seriously. Don't accept it if you do not need it. Always remember, you have to pay the cost of every loan whether it is pre approved or any other. one wrong decision can put you into a big problem.

Benefits of pre approved loan

Usually the processing time of pre approved loans is quite less therefore you will not miss a chance of buying a new car or a dream house. The home loans are like bonus for t people who have not yet finalized the property. Therefore it becomes easy for the customer to find a property according to the loan amount.

Once you have made up your mind to take loan then decide about the exact loan amount you require. Although the loan amount is decided by the bank, which is based on your pr loan repayment records or balance in your account, your credit card transactions and other banking transactions. Here you have a chance for negotiation with the bank.

What interest rate is being offered?

On pre approved loans bank usually offer slightly lower interest rate in comparison to other customers. There can be chances that other banks might be offering the same loan amount on quite cheaper rate. Hence before signing an agreement do search on interest rates.

Regarding interest rate ask your bank to clarify each and every aspect especially in case of home loans, whether it is fixed or floating and the time period.

Are documents required in this loan?

Yes you need to submit some documents. However the conditions are more or less same for this loan. Check with your bank, you might have to submit some documents except in case of house bank customers. There are some prior checks needed in case of home and car loans. Be careful about the documents otherwise a small discrepancy can get your pre approved loan cancelled. Last but not the least, before accepting pre approved loan take advice and check for the above details so that you don't loose anything.