Have you received an email or message from your bank saying that you have been pre-approved for a personal loan offer for a certain amount? Well, this is the standard message sent to customers by bank officials or their online tools.
Most of us must have come across the jaw-dropping messages where we were told that a loan amounted to say $30 Lakhs available in the next 15 minutes. “Go to the bank and receive the money within 10 minutes” or “Receive the money within the next 5 minutes.”
This is the standard template for most large banks, which have been pushing the limits to boost credit growth to the point where deposits can barely keep pace.
The credit-to-deposit ratio is at 80%, the highest level since the ratio began in 2005, according to the Reserve Bank of India.
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Meanwhile, while banks are improving their loan books, retail customers who receive attractive “offers” often believe they should get the loan. In other words, they may think they can afford the loan easily since the bank offers this offer.
However, no one knows better than you how much you can afford to pay back your loan.
Key Differences Between Eligibility and Affordability.
1. Eligibility is what a bank can offer based on a customer’s profile and credit score, while affordability is highly subjective. You may have other financial commitments currently or in the near future, about which your bank may not know anything.
2. Eligibility depends on meeting certain criteria such as monthly salary, submission of documents, certifications, etc. Sometimes banks will offer you a loan because you have never applied for one before.
However, once you apply for a loan, banks will usually perform some checks on your personal details, otherwise the loan may be withdrawn.
If you decide to choose any of the offers you qualify for, please make sure you consider the following factors:
3 Associations with other banks: Sometimes, you may already have a loan from another bank without the new bank knowing about it. So, ideally, you should ignore any such offers that you normally receive from banks or financial institutions that you don’t have regular contact with.
(Note: Raising a loan has its own risks. Therefore, it is recommended to proceed with caution)