Pre-qualified vs pre-approved personal loan: Differences and important things to note

Updated on: May 20, 2022

When looking to avail a personal loan, you will likely come across terms such as pre-approved or pre-qualified. These point to a special loan offer extended to you by modern lenders based on your qualification and whether or not you have an existing relationship with them. Such offers are greatly beneficial, especially if you have one from a leading lender. This is because it expedites 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 does not differ, with the only variation being the terminology. A quick comparison of pre-qualified vs pre-approved personal loan offers shows that while this is partly true, there are differences.

In fact, understanding the pre-approved loan meaning and how it differs from its counterpart is critical to avoiding common pitfalls. Moreover, by being aware of the distinctions, you can then identify the right loan offers for you and borrow wisely. Read on to know more.

What is the key difference between a pre-qualified and pre-approved personal loan?

Lenders typically conduct initial assessments to determine if you qualify for a loan. Based on the assessment, they may extend an offer. In some cases, when comparing a pre-qualified vs pre-approved personal loan, the distinction simply comes down to the lender’s definition. Some lenders may even conflate the two terms and use them interchangeably. This can complicate things and to minimise confusion, here is a breakdown of the meaning of a pre-qualified loan and a pre-approved loan and what these terms entail.

Pre-qualification is often considered the first step, wherein the borrower can either consult the lender or use specific tools to know whether or not they qualify for the loan. In some instances, lenders may have special digital tools such as an eligibility calculator. Here, you need only enter basic details such as your income, age, city of residence, employer, and your monthly outgo. Accordingly, the tool will then calculate the amount you can qualify for. Do note that any results calculated are indicative only and the lender can offer different terms or approve you for a lower sanction than you may be pre-qualified for. There is no guarantee that your loan will be authorised.

On the other hand, the pre-approved loan meaning suggests that the borrower has progressed in the loan acquisition. This is because a pre-approved offer is extended by lenders after they have assessed an existing customer’s profile. Such an assessment is only possible because the borrower has an existing relationship with the lender and has submitted their basic details along with financial information. For instance, if you have a Bajaj Finserv Pre-approved Personal Loan offer, you can avail the sanction almost instantly, within 30 minutes*, and without having to submit any additional documents or having to visit any branch office.

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 instance, if you have a CIBIL score below 650, you may not qualify for a pre-approved offer from a leading lender. However, if you have an excellent CIBIL score, 750 and higher, these offers will be available to you, and you may even get favourable terms. Keep in mind that even with a low CIBIL score, you may get pre-qualified 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 have to apply for the loan and go through the standard loan processes to get approval.

What are the important things to keep in mind when availing such offers?

The most important thing to note is that these offers aren’t guaranteed and are subject to change. Generally, 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 large expenditures and do not add to your debt obligations
  • Do not change jobs
  • Do not apply for new credit

Being prequalified for a loan helps you get an idea of what you can expect but being pre-approved definitely gives you an edge. This is particularly 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 of a pre-approved loan of up to Rs. 10 lakh. Bajaj Finserv also extends the offer of a flexible tenor, which ranges between 24 and 60 months, making this the ideal short-term offering. That’s not all, you can get the money in your account in just 30 minutes*.

Availing this offer is simple as Bajaj Finserv has a completely digital provision, wherein you can not only access and approve the offer online but also authorise disbursal. In some cases, you may be asked to submit basic KYC documents, bank details, and a cancelled cheque to process disbursal. To avail this offer and enjoy instant funding without any hassles, check your pre-approved offer today.

*T&C apply

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Published on May 20, 2022
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