Instant personal loan vs. pre-approved loan: What should you choose? Key points to consider | Mint
Source: Live Mint
Getting a loan can be a time-consuming task and time is often not a luxury for most of us. Banks, therefore, sometimes give an option of availing an instant personal loan in cases where e-KYC is already complete.
This means no sooner had you applied than you received an approval for it and the money was disbursed instantly.
Undoubtedly, it is a tempting offer to go for. However, there is another option. The other alternative is to avail a pre-approved loan. In this case, you already have an offer of loan, and you only need to accept it to be able to receive the money.
What is an instant loan?
An instant loan is the money that you can receive instantly without waiting for several days. This is quite common in cases where a customer’s eKYC is already complete. The customer only needs to get the online verification done by sharing his mobile number linked to PAN.
The lender sends an OTP to verify the mobile number. When the customer shares the OTP, the lender can verify his profile which includes his/her credit score. Based on this, a loan offer is sent to the customer.
What is a pre-approved loan?
This is an offer of loan given to a customer based on their profile. For instance, someone who has a very high credit score (above 720) may have an offer to borrow ₹5 lakh from the bank.
Key points to consider before opting for one
1. Rate of interest: One key factor to consider is the interest rate. At times, banks charge a higher rate of interest in case of pre-approved loan. So, when you have an existing offer, it is recommended to explore other options as well.
2. Lender’s reputation: Another factor worth considering is the bank’s reputation. Just because a bank has given a pre-approved offer, it does not mean it is in your best interest.
There could be some hidden costs involved. Therefore, it is advisable to check the lender’s reputation and ensure that it is a good offer.
3. Amount: Finally, you must consider the loan amount to make sure that it is sufficient to meet your borrowing requirement. And if it does not, then it is futile to raise one loan from here and another one from another lender to meet the shortfall.
(Note: Raising a loan comes with its own risks. So, due caution is advised)
