Last Updated:
Pre-approved loan has become the fastest and easiest offer from every bank today, but it also has many hidden aspects. For the sake of convenience, customers often ignore the real burden of interest, fees and EMIs. In such a situation, it is very important to understand the actual cost of every offer before immediately accepting it.
New Delhi. If suddenly an instant loan offer of Rs 3 lakh or Rs 5 lakh comes on your mobile, then it is not just a convenience but a well-thought-out strategy of the bank. Banks make a complete assessment of your capability based on your salary credit, average balance, old EMIs, credit card payments and credit score. After this, giving loan immediately without any paper process is the most profitable deal for them. They do not have to hire agents nor do lengthy processing, hence such offers keep appearing again and again in SMS and app notifications.
Why do such offers attract customers?
The biggest attraction of a pre-approved loan is the fast and hassle-free paperwork process. No branch visits, no forms, money in account in just a few clicks. It feels like a relief at the time of medical emergency, school fees or any big expense. Psychologically, after hearing the word pre-approved, customers take it as a reward, whereas it is a sales tactic.
The biggest misconception – pre-approved means cheapest loan
Most people assume that pre-approved loans will have the lowest interest rates, whereas this is often not the case. Banks charge higher interest in exchange for convenience, because they know that the customer will not make the effort to compare. Other banks can offer the same amount at lower interest if you make a simple application. Even just 2 percent more interest can impose an additional burden of thousands of rupees in three years. Therefore, before accepting the offer, definitely compare the rates with other banks.
Fine print: Hidden fees, impact of insurance and EMI
Due to the instant process, many people do not notice additional charges like processing fees and pre-ticked insurance. In many cases, there is a penalty of 2-5% on prepayment, which makes it expensive to close the loan early. Not only this, taking a big personal loan can also affect your credit score and future loan eligibility. Many banks also reduce the credit card limit to reduce the risk. Therefore, the customer should consider the total cost, EMI and future needs before immediately pressing yes on every offer.
