A lot of misconception prevails regarding a pre-approved loan proposal. This is a relatively fresh concept, given the popularity of direct lenders in recent times. It also contradicts the traditional style of lending.
First, pre-qualifying does not cause any damage to your credit status. In contrast, when you directly apply for a loan, it leaves an imprint on your credit report. This is not going to happen when you make the most out of the pre-approval facility.
This process follows a soft credit check that concerns your affordability. For this, you just have to share your financial history of recent times. The lender would be interested in making sure that you are paying your bills on time.
Besides, this check validates if there is room for additional savings in your ongoing financial structure. This gives an overview of the possibility of loan payments. In totality, this facility is going to be rewarding both for the borrower and lender.
Oftentimes, you want to have an estimate of the overall cost of borrowing. This calculation or comparison might not be possible with the typical lending method. However, it is doable when you opt for a pre-approved loan offer.
There are different ways this facility can be advantageous for you. Moreover, you must identify the setbacks it can impose in your case. For that, you must go through this blog.
Unlock opportunities with pre-approved loan offer
Pre-approval is the stage before agreeing to the loan offer. Both lender and borrower decide to go ahead based on some preliminary information. In the case of the applicant, documents of recent financial transactions and basic details like name, address, email, etc., are required.
After receiving these details and reviewing your financial background, the loan provider will produce the proposal. Therefore, if you are applying for unsecured loans with a direct lender, this is what is going to happen to you.
How you must go about getting a pre-approved loan offer?
This question must have bothered you from the start. There is nothing big to do to grab such proposals. The idea of getting a quotation to cross-check rates must be intimidating for you.
For this reason, you must be curious to know about the process. This is a simplified version of the application, as everything is going to happen online. There is no need for you to reach the bank when it is their working hours.
Direct lenders make sure that anyone can send a request at any time. This is how the lending platform has been structured. It gives you 100% flexibility to apply for loans from anywhere.
The following steps need to be completed.
Pay a visit to the application page
Finding the application form is not a tough task. One can easily navigate and reach the application page from anywhere on the website. It is a single-page form where you need to enter a few details.
The information that you have to produce will be very basic. You need to share your bank account details so that the lender can transfer money after final approval. Rest assured that no one can steal or misuse your personal information.
Undergo a few assessments
Once the lender receives your application, they quickly run a few checks. One of them is the affordability check. It helps them measure the possibility of loan payments.
After making confirmation, the lender will make the final decision. If it is in your favour, you will receive a notification on the spot.
Receipt of loan quotation
Once the lender is convinced of your financial potential, they send the loan proposal. It looks like the actual loan offer. However, accepting it does not mean you can have money right away.
This offer is made available so that you can understand the price structure. It also gives you an idea about the repayment pattern. This provision is to let you ascertain if getting these loans is worth it or not.
Agreement after acceptance
If you give your consent, the lender will prepare the agreement and send it at once. Do not sign on the dotted lines right away without revising the terms and conditions carefully.
Once everything is favourable for you, sign it properly and wait for the lender’s response. The final step is the transfer of money to your checking account.
Therefore, a pre-approved loan offer is an integral part of the lending process. Make the most out of this to choose the ideal loan deal.
How can you take advantage of this arrangement?
Knowing the benefits of this provision can help you make a rational decision. You can avail of this facility at the time of applying with a direct lender in the following ways.
- Assessing if rates are affordable is possible
- There is no need to follow a stringent process
- Less time will be wasted unlike when you submit a direct application
- Compare offers from different lenders easily
- You can validate if you are eligible before applying
- Reduce the possibility of facing rejection
- It does not leave a negative impact on your credit history.
What to do if you are turned down?
If you think that pre-approval rejection can be harmful, you are wrong. This is unlike typical borrowing. Thus, denial cannot hurt your credit scores. They will remain as it but might be a potential reason behind the rejection.
At times, if your credit scores are in disastrous condition, the lender might find it risky. Then, they would like to stay away from giving away a pre-approval. In that case, you must try to improve your credit scores.
Become a hard-core frugal person who gives importance to vital payouts only. Cut short all the less significant expenses so that you can save enough money. This way, you can use your savings to downsize debts and enhance your credit history.
The bottom line
A pre-approved loan offer is a door of opportunity to borrow money at the best rates. You can collect as many proposals as possible because there is no hard credit checking for you. Finally, you can have all of them together for a comparison.
Roscoe Tanner
Roscoe Tanner is the Editor-in-Chief, leading a large team of writers at LoansForever. He has expertise in writing for various borrowing options like personal loans, long-term and short-term loans, unemployed loans and many more. Roscoe joined LoansForever in 2015 but previously worked with many reputed loan companies. He performs the major role as the editor, covering key aspects of loans and finance. Roscoe Tanner wants to serve at large in the progress of the company and to present a modern alternative to the traditional financial industry in the UK. He is a Certified Financial Planner and has a god-gift of connecting with people through his valuable suggestions and writings. His expertise as a writer and editor in the finance industry is based on his education qualification. Roscoe has done a Master of Business Administration (MBA) in Finance.
