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Pre-Qualified vs. Pre-Approved Personal Loan: What’s the Difference?

Published on Jan 19, 2024Updated on Feb 22, 2024

Pre-Qualified vs. Pre-Approved Personal Loan: What’s the Difference?

While applying for personal loans, two terms are often confused: pre-qualified and pre-approved personal loans. While many people may use these two terms interchangeably, there is a significant difference between them. Understanding this difference is crucial to making informed decisions when applying for personal loans. A pre-qualified personal loan involves an initial assessment of eligibility based on basic information.

In contrast, a pre-approved personal loan marks a more advanced stage in the loan process, often tailored for existing customers. This article covers the meaning and difference between prequalified vs preapproved loans, when to opt for pre-qualification and pre-approval, and guides you on increasing your chances of getting pre-approval.

Brief Overview of the Personal Loan Application Process

The personal loan application process can be carried out through both offline and online channels. You can apply at the lending institution branch by completing the application and submitting the necessary documentation. However, nowadays, the online application processes are faster and more convenient. In online sources, it can be as easy as four steps:-

  1. Verifying phone number
  2. Entering Personal Details
  3. Providing Loan Details
  4. Uploading Documents

Importance of Understanding Pre-qualification and Pre-approval

Knowing the difference between pre-qualification and pre-approval is essential when looking for loans. This knowledge will help you understand your eligibility stage in the loan process and make informed financial choices accordingly. Pre-qualified and pre-approved are two different stages, and knowing the distinction between them is essential. Understanding this difference allows you to determine your stage and make decisions accordingly.

Pre-Qualified Personal Loans

Pre-qualified personal loans estimate credit offers based on customer profiles. Lenders use soft credit inquiries to assess credit history and offer tailored estimations without affecting credit scores. Benefits include quick loan estimations, but these non-binding offers do not assure final approval or terms, necessitating further assessment for eligibility and terms.

Pre-Approved Personal Loans

A pre-approved personal loan from lenders is granted to eligible clients based on factors like their banking relationship, savings/current account balance, fixed deposit, and credit card usage. In contrast, non-banking financial companies like SMFG India Credit offer a top-up instant personal loan, which is basically a pre-approved loan to existing customers with a history of timely repayments and a favorable credit score, without the need for collateral.

This personal loan, with varying interest rates based on the borrower's profile, can be utilized for various purposes, including unforeseen job loss, medical emergencies, or unplanned events. Several reasons may qualify you for a pre-approved or top-up loan, such as a stellar repayment record, increased monthly income, or responsible financial behavior reflected in your latest credit report.

Discover the Benefits of an SMFG India Credit Personal Loan:

  • Loan Amount: Avail personal loans up to INR 25 lakhs*.
  • Interest Rates: Enjoy competitive interest rates starting from 11.99%* per annum
  • Flexible Tenure: Choose a repayment plan that suits your budget with a flexible tenure of 12–60 months.
  • Easy Documentation: Experience a hassle-free documentation process for your personal loan.
  • Quick Disbursal: Benefit from swift loan disbursal and instant decisions through digital processing.
  • Online Application: Save time and enhance efficiency by submitting your loan application online.
  • Top-Up Loan Offers: Exclusive offers on top-up loans for existing customers.
Must Read: Discover the Top Benefits and Advantages of Personal Loans

Eligibility Criteria for Pre-Approved Personal Loan

SMFG India Credit streamlines the process with a special eligibility calculator. Input your birthdate, monthly income, existing monthly EMIs, interest rate, and tenure to estimate your maximum personal loan amount.

The eligibility criteria include Indian citizenship, employment with a private or public limited company, age between 21 and 60, and a minimum monthly income of INR 20,000 (except for Mumbai and Delhi, where it should be at least INR 25,000).

Documents Required for Pre-Approved Personal Loan

SMFG India Credit requests the following documents for an instant personal loan:

  • Completed personal loan application with a recent photograph - Identity proof (passport copy, voter ID, Aadhaar card, driving license, etc.)
  • Address proof (ration card, rental agreement, telephone bill, etc.)
  • Age proof (PAN card, birth certificate, etc.)
  • Bank statement or passbook covering the last 6 months of salary or three months of salary slips - Form 16
  • Cheque for processing fee - Income tax returns

Please note that additional documents may be required on a case-by-case basis, and our representative will provide you with the necessary details.

Conclusion

The difference between pre-qualified and pre-approved personal loans is crucial for informed borrowing decisions. Pre-qualification offers a preliminary estimation based on self-reported data, while pre-approval involves a detailed credit and financial assessment. Pre-approval signifies a higher stage in the process, providing more reliability but not a 100% guarantee of loan approval.

Improving credit scores, managing debt-to-income ratios, and preparing necessary documentation are vital to enhancing prospects. SMFG India Credit offers a hassle-free online application process with flexible tenure and competitive interest rates for pre-approved loans. For existing customers, fewer documents are required. Apply Now!

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*Terms and Conditions apply. Loans are disbursed at the discretion of SMFG India Credit.