How Personal Loan Pre-Approval Works

A personal loan is a short-term loan which could be used for any legitimate purpose. You won’t be required to pledge any form of collateral or security against it. It can be used to meet immediate personal expenses like a medical emergency, to fund your wedding or to finance higher education, the funds can also be used as a capital for business or to consolidate debts. If you’ve ever shopped for a Personal Loan, it is likely that you’d have come across pre-approved personal loan offers. So, let’s have a look at what exactly is a pre-approved loan offer, and whether you should avail this offer.

What Is A Pre-Approved Personal Loan?

A pre-approved loan is usually offered by banks and NBFCs to their customers who have a clean track record of repaying their loan dues. It is often offered at a lower rate of interest. Some lenders pre-approve a personal loan to its customers even if they have no credit history based on parameters like income and savings history. It is often a limited period offer. There are several advantages of getting a pre-approved personal loan such as minimal documentation, and it is processed within a few days. You could also check with your lender if you are pre-approved for a loan offer, or you could log into your net banking account and see if you are eligible for a pre-approval on your loan. Do keep in mind the final approval will depend on your credit history and the lending policies set by the lender.

Personal Loan Eligibility Criteria

  • Age Of The Borrower: The borrower’s age plays an important role in the ability of repayment of the debt. Salaried individuals need to be between the age of 21 and 61 years. If the borrower is self-employed, 21 to 60 years is the age range to be eligible for a personal loan.
  • Financial Stability: One of the most primary factors is that the applicant must have a steady and regular source of income which ensures that the loan EMIs will consistently be paid. If you’re in the habit of frequently switching your jobs, your loan application might be rejected by the financial institution.
  • Monthly Income: The Loan amount that gets sanctioned is directly proportional to the borrower’s income. The higher the earnings, the higher the loan amount you will be eligible for the loan.
  • Type of Company: Whether it is a private, public or a multinational company (MNC), if the borrower is working in a well-known company will be considered as someone with a stable job. The lenders see such individuals as a safe bet, making it easier to avail a loan.
  • Credit Score: A good credit score means the applicant is disciplined with his/her repayments towards loan EMIs. On the other hand, a low CIBIL Score denotes a bad credit history and it implies that the applicant was not timely with his/her payments. Defaulting on loan EMI repayments and credit card bills lower your chances of being eligible for a loan.

Documents Required for a Personal Loan

For salaried professionals:

  • Documents for Proof of Residence such as Rent Agreement / Utility Bill (not more than 3 months old) / Passport (anyone)
  • Proof of Identity: Passport / Driving License / Voters ID (anyone)
  • PAN Card
  • Latest 3 Months Bank Statement
  • Salary slips for last 3 months
  • 2 passport size photographs

For self- employed individual:

  • PAN Card
  • KYC Documents such as Proof of Identity; Address proof; DOB proof
  • Documents like Leave and License Agreement / Utility Bill (not more than 3 months old) / Passport (any one).
  • Income proof (audited financials for the last two years)
  • Latest 6 Months Bank statement
  • Office address proof
  • Proof of residence or office ownership
  • Proof of continuity of business

Applying For A Pre-Approved Loan

If you get an offer via SMS or call through your banks or financial institution, all you need to do is respond to the same as applicable to start with the loan process. You can also get in touch with your bank to get started with the processing. In addition, you can check with your eligibility and apply for a pre-approved loan via your net banking account too. The following are the steps to apply for it:

  • Log in to your net banking account
  • Click on the ‘loans’ section and choose ‘pre-approved loans’ option
  • Click on the ‘apply now’ button
  • Now select your preferred loan type to proceed with the next step
  • Fill the required information and submit your form for pre-approval of loan


Hemant Kumar
Hemant Kumar is a project manager at Tridindia with more than nine years of commendable experience in writing about LMS, translation, and IT. His unmatched talent and passion for digital marketing gave him the opportunity to work as a multi-tasking project manager at TridIndia’s sister company, Link Building Corp. Today, he contributes to the world by imparting knowledge on SEO, link building and internet marketing etc., that helps business owners grow their online business.