What is a pre approved loan and should you take it?

by Finway FSC Empowering People Financially

Banks, sometimes, to attract their customers, offer pre-approved loans. A pre-approved loan means that to get the loan, you don’t need to go through the tedious approval process. You can also get pre-approved loan whether you’re taking a business loan in Delhi, or a home loan in Delhi, or any other city for that matter. The disbursement of the loan is based on the credit history of the borrower and previous study that is conducted independently by the lending institution to check the loan eligibility of the borrower.

How can you acquire a pre-approved loan?

A message of approval is sent to the customers who might be interested in availing the loan.
If the customer is interested and he wants to avail the loan, then he has to furnish the details of the property after finalising the purchase.
The lending institution then verifies the legal and financial status of the property in question.
Terms of the loan are finalised.
The agreed upon loan amount is disbursed to the borrower.

You should keep in mind though, that a pre-approved loan is a limited offer and it expires usually within six months.

Advantages and drawbacks of a pre-approved home loan in Delhi

Advantages

· One of the greatest advantages of pre-approved loans is that they put you in the driving seat and give you control over the planning of your finances. Since you know the loan amount you can avail beforehand, you can search for properties accordingly in a more focused manner.

· If you’re looking for a property with a pre-approved loan, it establishes you as a serious buyer in the eyes of a broker. This helps you to negotiate a better deal.

· Also, given the fact that only your financial documents and credit score is checked during the laon approval process, pre-approved loans are much easier to avail and are hassle free as compared to conventional loans.

Drawbacks

· A disadvantage of pre-approved loan, however, is that if the rate of interest falls during the period of approval to period of disbursement, you, as a customer, wouldn’t be able to benefit from it because the interest rate has been already agreed upon.

If you decide to not take the pre-approved loan midway or if the validity of the loan expires, then you’re not entitled to the reimbursement of the initial fee you pay to the lending authority.