Are Your Preapproved Loans Really Approved?

For such financial products, one should be aware of the terms and conditions

- Himali Patel

You must have received SMS’s from banks saying “Your preapproved limit for debit card EMI-loan is Rs. 80,000. Avail and get free amazon voucher of Rs. 1000.” As exciting such offers may sound, pre-approved financial products or pre-qualified loans are not very uncommon today.

Simply put, a pre-approved loan is an offer for a loan based on your credit worthiness. Banks provide such loans to potential borrowers, based on fulfillment of certain pre-determined terms and conditions. The loans can be either secured, such as home loans, auto loans, or unsecured, such as personal loans and credit card loans. Even before you are made an offer, the bank has already assessed your financial standing and ability to repay the loan based on any previous loan you may have taken or on your creditcard management skills. If you have good financial credibility, you are eligible for such offers.

This is typically done when information about the customer is available with the lender before-hand. “This could happen on account of the customer having a direct existing relationship with the lender (Liability/ Asset Relationship) or if the customer is a part of the pool of customers of a partner to the lender (Indirect Relationship),” explained Anshul Swami, Head, Retail, Inclusion and Rural Products, RBL Bank.