What are the benefits of Pre-approved Loans ?

Q: How is this Pre approved loan work ?

Rama Naidu, Chennai

21st October 2014

Legal in Chromepet, Chennai

bank loan

legal advice

pre approved bank loan

power of negotiation

loan processing time

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Replies (2)

Hi Guys,
what is this CIBIL score? How come it could reduce the credit burden of a customer. I think credit scoring system is painful for me.

Rama Naidu, Chennai

21st October 2014

Comment

Hi Mr Naidu,

In my point of view, CIBIL score is the new beginning to creating a mature credit market in India. It is a single score which could be used for obtaining home loans, personal loans, and buying appliances such as mobile, air conditioners, etc. on credit. The grace period for making a payment on a missed credit card payment varies from bank to bank but it is usually capped at 90 days.

Ramana Vignesh, Chennai

21st October 2014

Hi Rama,
As per my knowledge, beyond this period (90 days ), the bank considers the balance due as Non-Performing Asset (NPA) and will be reported to CIBIL. Although missing a payment by a few days could have a temporary impact on the credit score, a significant delay in payment could hurt the score over a longer term. Missing the deadline on your bills could be a serious issue when approaching a bank for a home loan.

Rajnikanth, Chennai

21st October 2014

Hi All,

According to me, if the payment was missed but if it was repaid within 90 days, you can expect the score to bounce back to the original score within a short period. It is possible to reach close to the original score within 180 days of missing such a payment. However if the payment was delayed beyond 90 days, it will be considered a major default, thus affecting the credit score over a longer time.

Chandra mouli, Chennai

21st October 2014

Hi All,

Yes I am agree with Rama that the credit scoring system can be a pain for consumers, it could reduce the credit burden by providing loans at a lower interest rate to credit worthy consumers. Banks providing housing loans generally look at CIBIL score for deciding the limit on the loan account.

Venu Gopal, Chennai

21st October 2014

@Rama,
As with any credit monitoring system, CIBIL provides the score that consumers can validate and monitor. Errors or fraudulent credit entries could be made if the CIBIL score is not monitored at regular intervals. It is vital to verify the score by visiting CIBIL.com. The cost of obtaining the Credit Information Report (CIR) is Rs.154 while a complete CIBIL CIR and Transunion score costs Rs.470.

Alex Stephen, Chennai

22nd October 2014

Hi Mr Naidu,
As per my knowledge, due to higher liquidity, banks have started recently sending mails to customers or non customers about pre approved loan availability. This is a method to make possible applicants feel more secure and confident about the loan sanctioning process for their specific case.

VKumar, Chennai

21st October 2014

Comment

Hi Rama,

Generally, banks and other financial institutions look for good customers who tend to pay their EMIs and credit cards at right time. If you have a good track record of paying EMIs and have a good CIBIL score, then banks try to make the loan process easier for you. The bank will assess your eligibility to obtain a loan based on these records.

Venu Gopal, Chennai

21st October 2014

Hi All,

In my point of view, the amount of loan that you are eligible to obtain, which is mentioned in the document, is derived based on your saving capability, income, transactions from the account, consistency in salary deposits, etc. Yes , this plan is definitely helpful for both banks & customers.

Gaurav, Chennai

21st October 2014

Hi Mr Naidu,

In my point of view, Pre approved loans are just approvals given by banks for a large amount. Such sanctions would be given up to an eligible amount and are generally accompanied by letters mentioning approval for the home loan. But how far it is help full that you will know while discussing with bank executives.

Chandra mouli, Chennai

21st October 2014

Hi All,

Yes I agree with what Mr Gaurav & others are saying . But according to me, this type letters are only approvals. However, you would still have to fulfill conditions stated by the bank would expecting home loan amount to be release. The letters would also have a validity period after which they would become void.

Ramana Vignesh, Chennai

21st October 2014

Hi Mr Naidu,
Actually when I heard about this loan system , I was little bit confused. But after that i came to know, advantages of Pre -approved home loans are Planning, Power of Negotiation & Shorter Processing time.

Planning is like- It generally has the advantage of allowing a person to plan for the amount of loan that he would be able to get with surety.

Rajnikanth, Chennai

21st October 2014

@ Rama,

As per my knowledge Power of Negotiation is like - It also gives the applicant some negotiation power when it comes to interest rates as the buyers would know that he has been approved and is considered a good catch by the bank.

Rajnikanth, Chennai

21st October 2014

@ Mr Rama,
And according to me Shorter processing time is like- Pre approval of such loans reduce the processing time for such loans. It also reduces the amount of documentation required for obtaining the sanctioned amount. The time required for sanctioning is said be be reduced to one third of the normal time.

Rajnikanth, Chennai

22nd October 2014