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What is a pre-approved personal loan? A Handy Finance guide

Personal loans are a popular financial solution for covering various expenses, from home improvements to consolidating debt or funding a major purchase. One of the ways to simplify the borrowing process is by obtaining a pre-approved personal loan, which gives you a head start on the loan application process. While pre-approval doesn’t guarantee final loan approval, it provides valuable insights into your borrowing capacity, helping you plan more effectively. In this guide, we’ll explain how to get pre-approved for a personal loan, its benefits, and what to consider before applying.

What is a pre-approved personal loan?

A pre-approved personal loan is a conditional offer provided by a lender based on a preliminary assessment of your financial situation. With Handy Finance, this involves a hard credit check. During pre-approval, the lender reviews basic financial information, such as your income and credit history, and outlines potential loan amounts and interest rates. However, keep in mind that pre-approval is not a guarantee of final loan approval, as full verification of your financial details is required before the loan is issued. To understand your borrowing power and estimate your repayments, use our Loan Calculator. For a personalised, obligation-free loan quote, simply apply via this form.

Benefits of pre-approved personal loans

Faster loan process

Pre-approval can streamline the final loan application process if you decide to proceed, as the lender has already reviewed your initial financial details, making final approval quicker.

Planning and budgeting

Knowing the pre-approved loan amount helps you plan and budget effectively. It provides clarity on how much you can afford to borrow and enables you to set a realistic repayment plan.

Clarity on borrowing capacity

Pre-approval gives you a clear understanding of your borrowing capacity, helping you align your loan amount with your financial goals.

Stronger negotiating position

Having pre-approval in hand puts you in a stronger negotiating position, whether you’re looking to finance a car, consolidate debt, or make a large purchase.

Flexibility

Handy Finance’s pre-approval is valid for 30 days, allowing you ample time to make decisions without feeling rushed.

Drawbacks of pre-approved personal loans

Not a guarantee:

It’s important to remember that pre-approval is not the same as final approval. The lender will need to verify your financial information and may adjust the loan amount or terms based on their findings during the full application process.

Temptation to overspend:

Knowing your pre-approved loan amount may tempt you to borrow more than you actually need. It’s essential to borrow only what you can comfortably repay to avoid financial strain.

Multiple inquiries can affect credit:

Applying for multiple pre-approvals with hard credit checks can lower your score. It’s crucial to be mindful of how many lenders you approach during your search for a loan.

Navigating pre-approved personal loan offers

Carefully review the offer:

Before accepting a pre-approved personal loan, thoroughly read the terms and conditions. Ensure you understand the interest rate, fees, and repayment schedule before proceeding.

Proceed only when needed:

While getting pre-approved can be an exciting step, it doesn’t commit you to go forward with the loan. Apply for a personal loan only when you truly need the funds and have a clear plan for how you’ll use them. Make sure you’re financially ready to manage the repayments comfortably.

Obtaining a pre-approved personal loan is a proactive step that can provide valuable insights into your borrowing capacity and streamline the loan process. It empowers you with knowledge about how much you can potentially borrow, helping you plan and budget more effectively. The great news is that getting pre-approved doesn’t obligate you to take out a loan—it’s simply a way to explore your options without any pressure. By understanding your borrowing power upfront, you can make informed decisions at your own pace. We encourage you to consider pre-approval as a risk-free tool to enhance your financial planning.

How to obtain a pre-approval with Handy Finance

At Handy Finance, getting pre-approved is straightforward and gives you clarity without pressure. By submitting some basic financial details, you can quickly learn about your borrowing limits and potential interest rates. Handy Finance pre-approvals are valid for 30 days, giving you the flexibility to explore options and take your time deciding.

While pre-approval can make loan planning and negotiation easier, it doesn’t lock you into a loan, so you’re free to take the next steps only if it’s the right fit. If you need help assessing different options, our Handy Finance team is here to help you. Reach out today to make confident, informed financial decisions.

Approvals are subject to Handy Finance’s credit criteria and responsible lending requirements. Fees, charges, terms and conditions apply. Finance provided to approved applicants by OurMoneyMarket Lending Pty Ltd ABN 64 605 231 669, trading as ‘Handy Finance’ holds Australian Credit Licence number 488228 and is a member of the Australian Financial Complaints Authority (AFCA). The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, we recommend that you consider whether it is appropriate for your circumstances. We recommend you obtain independent advice before acting on any information in this article.