Pre-Approved Loans: Convenience Hides Higher Rates & Fees

• Banks offer pre-approved loans as a deliberate strategy, assessing financial capabilities for profitable, instant disbursement without extensive paperwork.
• Customers are attracted by the speed, hassle-free process, and quick relief for emergencies, often perceiving "pre-approved" as a reward.
• A common myth is that pre-approved loans have the lowest interest rates; banks often charge higher rates for the convenience.
• Always compare interest rates with other banks before accepting a pre-approved offer, as even a small difference can add up significantly.
• Be aware of hidden costs like processing fees, pre-paid insurance, and prepayment penalties, and consider the impact on your credit score and future loan eligibility.

Why It Matters: Understand pre-approved loan costs and risks before accepting easy offers.