Pre-Qualified vs Pre-Approved Personal Loan: Differences and Important Points to Note
When looking for a personal loan, you will likely come across terms such as pre-approved or pre-qualified. These indicate a special loan deal offered to you by modern lenders based on your qualification and whether or not you have an existing relationship with them. Such offers are very beneficial, especially if you have one from a top lender. In effect, it speeds up the loan acquisition process and may even negate the need for an application. However, many believe that the meaning of a pre-qualified loan and a pre-approved loan do not differ, the only variation being the terminology. A quick comparison of pre-qualified and pre-approved personal loan offers shows that while this is partly true, there are differences.
In fact, understanding what the pre-approved loan means and how it differs from its counterpart is key to avoiding common pitfalls. Moreover, by being aware of the distinctions, you can then identify the loan offers that suit you and borrow wisely. Read on to find out more.
What is the main difference between a pre-qualified and pre-approved personal loan?
Lenders usually do initial assessments to determine if you qualify for a loan. Based on the evaluation, they can make an offer. In some cases, when comparing a pre-qualified vs pre-approved personal loan, the distinction simply comes down to the definition of the lender. Some lenders may even confuse the two terms and use them interchangeably. This can complicate things and to minimize confusion, here is a breakdown of what a pre-qualified loan and a pre-approved loan mean and what those terms entail.
Pre-qualification is often considered the first step, in which the borrower can either consult the lender or use specific tools to find out whether or not he is eligible for the loan. In some cases, lenders may have special digital tools such as an eligibility calculator. Here, you just need to enter basic details such as your income, age, city of residence, employer, and monthly expenses. Accordingly, the tool will then calculate the amount you can claim. Note that any calculated results are only indicative and the lender may offer different terms or approve you for a lower penalty than you might be pre-qualified for. There is no guarantee that your loan will be approved.
On the other hand, the meaning of the pre-approved loan suggests that the borrower has progressed in acquiring the loan. Indeed, a pre-approved offer is extended by lenders after evaluating the profile of an existing client. Such an assessment is only possible because the borrower has an existing relationship with the lender and has submitted basic contact details as well as financial information. For example, if you have a Bajaj Finserv Pre-Approved Personal Loan offer, you can benefit from the sanction almost instantly, within 30 minutes*, and without having to submit additional documents or visit a branch.
Does your credit score impact your pre-approved or pre-qualified offers?
Your credit score will impact your loan offers, especially a pre-approved offer. For example, if you have a CIBIL score below 650, you may not qualify for a pre-approved offer from a top lender. However, if you have an excellent CIBIL score, 750 and above, these offers will be offered to you, and you may even benefit from advantageous conditions. Keep in mind that even with a low CIBIL score, you can get prequalified loan offers based on your income and other factors. Lenders are not required to offer you a loan based on your pre-qualification. You will need to apply for the loan and follow standard loan processes to get approved.
What are the important things to keep in mind when using such offers?
The most important thing to note is that these offers are not guaranteed and are subject to change. Typically, changes to your financial or credit profile will cause lenders to revise their pre-approved offers. So if you intend to avail a loan based on the pre-approved offer available, keep these tips in mind.
Continue to pay your current credit obligations on time to maintain a high credit score
Avoid big expenses and do not increase your debts
Don’t change jobs
Do not apply for new credit
Being pre-qualified for a loan helps you get an idea of what to expect, but being pre-approved definitely gives you an edge. This is especially true if you qualify for a Bajaj Finserv pre-approved personal loan. Depending on your credit profile and existing relationship with the lender, you can avail a pre-approved loan of up to Rs. 10,000,000. Bajaj Finserv also extends the flexible term offer, which varies between 24 and 60 months, making it the ideal short-term offer. That’s not all, you can get the money in your account in just 30 minutes*.
Availing this offer is easy as Bajaj Finserv has a fully digital offer, where you can not only access and approve the offer online, but also authorize the disbursement. In some cases, you may be required to submit basic KYC documents, bank details and a void check to process the disbursement. To benefit from this offer and enjoy instant financing without any hassle, check your pre-approved offer today.
*Terms and conditions apply
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May 20, 2022