Avoid Expensive Pre-Approved Personal Loans: Stay Cautious Before Taking One Pre-approved personal loans often arrive on mobile phones daily, promising quick cash without paperwork or bank visits. While these offers seem attractive, especially during financial emergencies, they can lead to hidden costs if not carefully evaluated. Here’s what to consider before accepting such a loan. Interest rates are a critical factor. Many borrowers focus only on the advertised rate, but it’s essential to determine whether it’s fixed or floating. Floating rates may start low but could rise over time, increasing the total repayment amount. Additionally, the advertised rate may not apply to everyone—it depends on factors like credit score, income stability, and existing loan history. Always verify the actual rate you’ll receive before proceeding. Another common pitfall is the loan amount. Banks often deduct processing fees, insurance charges, and other costs before disbursing funds. This means the amount credited to your account may be less than expected. For instance, a loan advertised as ₹50,000 might result in only ₹45,000 being transferred after deductions. Always calculate the net amount you’ll receive upfront to avoid surprises. Some borrowers prefer shorter repayment periods to minimize interest, but pre-approved loans may not offer flexibility. Check whether you can shorten the loan term, make additional payments, or adjust the repayment schedule. These options can help reduce the total interest paid over time. The total repayment amount is often overlooked in favor of low monthly installments (EMIs). A loan with a low EMI might extend the repayment period, leading to higher overall interest.#interest_rates #banks #credit_score #loan_amount #pre_approved_personal_loans
