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What is a pre-qualified personal loan? Benefits, limitations, and how it works


Published on 2025-03-26 15:01:19 - Mint
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  • Personal loans provide quick access to funds, with pre-qualification offering an initial assessment of a borrower's eligibility. This process involves a soft credit inquiry, allowing borrowers to learn about potential loan terms without impacting their credit score.

A pre-qualified personal loan is an initial assessment by lenders to determine how much they might be willing to lend to a borrower based on preliminary information like credit score, income, and debt-to-income ratio, without impacting the credit score. This process helps potential borrowers understand their loan eligibility and potential loan terms before formally applying. Benefits include getting an idea of loan amount, interest rates, and terms without a hard credit inquiry, which can help in financial planning and comparing offers from different lenders. Limitations involve the pre-qualification being an estimate, not a guarantee, as the final loan approval depends on a detailed credit check and verification of all provided information. The article explains how this pre-qualification works, its advantages in terms of transparency and preparation, and the caution needed since the actual loan terms might differ upon full application.

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[ https://www.msn.com/en-in/news/world/what-is-a-pre-qualified-personal-loan-benefits-limitations-and-how-it-works/ar-AA1BFPkQ ]