Pre-Approved Personal Loans: Why Banks Push Them & When to Decline

• Banks offer "pre-approved" personal loans using existing customer data, making them easy to market and profitable due to higher interest rates.
• "Pre-approved" doesn't guarantee the best terms; interest rates are often average to high, reflecting a convenience premium and lack of negotiation flexibility.
• Consider pre-approved loans for genuine, short-term emergencies or defined needs with a clear repayment plan, especially if you have a strong credit profile.
• Decline offers for lifestyle enhancements, "just in case" scenarios, or if you have multiple EMIs, as they can lead to long-term debt and financial vulnerability.
• Always review the Key Fact Statement, focusing on annualized cost, foreclosure charges, and part-payment rules, and ask if you'd pursue it manually.

Why It Matters: Pre-approved loans are tools; use them deliberately for clear needs, not impulsively, to avoid long-term debt.