Know How Pre-Approved is Different from Pre-Qualified Loans

Knowing the difference between pre-qualified and pre-approved loans is crucial, as both give you quick access to funds. Lenders provide these offers based on your creditworthiness and your previous relationship with them, if any. 

These offers expedite the approval process as lenders already have the required details, thus enabling quicker access to money. Read on to better understand these offers and how they differ from each other. 

What is a Pre-Approved Loan?

The following points will help you understand what these loans are and how they work: 

• Getting this loan is a more complex process compared to pre-qualification loans
• This is because lenders require a more comprehensive approach when reviewing your credit history and other financial information
• Like pre-qualification loans, these don’t guarantee a loan but are more precise estimations of whether you can get a loan and the amount you can get.
• Lenders will conduct a hard inquiry on your credit score, which can temporarily dip your score

What is a Pre-Qualified Loan?

Check details about this lending facility below:

• This is an initial stage of the borrowing process, where you submit financial data to the lender for review
• You will have to furnish details about your income, bank account and the amount you want to borrow and more
• Once done, the lenders will run a soft credit inquiry to evaluate your creditworthiness
• Note that these inquiries don’t have any impact on your creditworthiness
• Based on the evaluation, they will determine the amount you can borrow and determine the repayment options
• Remember, this offer isn’t a guarantee that you’ll get the amount that you want.

Also Read: Get your loan approved within minutes

Difference Between Pre-Qualified and Pre-Approved Loans

Check out the following table to understand the difference between pre-qualified and pre-approved loans:

Basis	Pre-Qualified Loans	Pre-Approved Loans
Offer	Borrowers can initiate the process by submitting a pre-qualification form.	Lenders provide you with these offers if you appear on the list of creditworthy borrowers
Type of Credit Inquiry	Requires a soft inquiry into your credit, which doesn’t have any impact on your credit score.	Requires a hard inquiry into your credit profile, lowering your credit score temporarily.
Information Required	Lenders generally review basic information, including income and credit repayment history.	These generally have an in-depth review process and may require you to submit some documents to get an updated offer
Guarantee for Approval	They don’t guarantee loan approval.	While they don’t guarantee approval, their estimation is more accurate than pre-qualification.
Use	This offer allows you to weigh different lending options and choose the one that best fits your financial needs.	This service is the first step in securing a loan approval letter from the lender.
Estimation Results	Banks and other lending institutions generally provide instant results for pre-qualification.	Lenders may take several hours or days to provide a result.

Things to Consider When Opting for Such Offers

When assessing such offers, you must consider these aspects:

• These offers don’t guarantee loan approval and are subject to change
• These offers are only an estimation of:
  • Your eligibility for a loan 
  • The quantum of funding you can borrow 
  • Your repayment options
• Lenders may modify the pre-approved offer in case of a change in your credit profile
• Paying your dues on time can help you secure a pre-approved loan offer 
• Manage credit responsibly and avoid adding to your existing obligations if you are finding it difficult to clear them timely.   

All in all, being qualified for a loan gives you a clear idea of what to expect. On the other hand, being approved simplifies this process and reduces your loan disbursal time significantly. 

With Fibe, you can get an Instant Personal Loan of up to ₹5 lakhs at affordable rates and flexible tenure. The application process, with minimal paperwork, takes not more than a few minutes. Download the Fibe Instant Loan App or log in to our website to get funds instantly.  

FAQs on the Difference Between Pre-Qualified and Pre-Approved Loans

What does it mean when a loan is pre-approved?

Here is what this offer means:

• Lending institutions extend this to their consumers with remarkable credit history 
• These products allow you to get funds with minimal documentation and processing time

What is the main difference between pre-qualified and pre-approved loans?

The key point of difference is that pre-approved offers are a more thorough and accurate representation of the loan you can get. Additionally, these offers are extended after a hard inquiry, which can lower your score. But pre-qualified are made available after soft inquiries, with no impact on your score.