Pre-approved personal credit limit is a type of loan offered by banks, credit unions and financial institutions to their clients. This type of credit is increasingly widespread. In the meantime, you might want to know her a bit more before you know if it really is the best fit for your needs. Want to know more?
How does the personal loan limit work?
Unlike a regular loan, the pre-approved personal credit limit allows the customer to pay interest only from the use of cash.
Banks hardly refuse to grant pre-approved personal credit, even though it is not required. The amounts granted may also vary according to the criteria of each institution. Typically, factors such as income, Serasa score, current information, age, occupation, and other critical information are considered.
This way, the customer may have a certain loan approval in one institution and a denied order in another, for example.
Attention to interest
The pre-approved personal credit limit also involves some peculiarities that deserve attention.
If your name is negative, for example, the loan may even be approved. However, interest will naturally have a higher rate. And even for those who don’t have the dirty name on the square, you need to look at the Total Effective Cost (CET) of the loan, which is the charges to be paid to get the money.
Similarly, the better the customer profile (good score, clean name, updated information), the better the chances of getting a good rate and a good pre-approved loan limit.
Obviously, every type of credit requires change. It would be no different regarding the use of the pre-approved personal credit limit.
First, consider whether your income is sufficient to cover the value of the installments in the future.
Also keep in mind that the credit limit must be used strategically. If your intention is to buy a property that can be paid in installments, for example, using the limit is not the best option. After all, the interest will be higher on this type of credit.
However, if your intention is to borrow to pay off higher interest debts, such as credit card and overdraft revolving loans, the credit limit is an alternative to consider.
Before applying for a loan
Nonetheless, every caution is little about the financial institution from which you will borrow. Make sure the company is trustworthy, which has become simple to check through on the internet reviews.
Last but not least, it is critical to know your own credit limit. After all, this type of credit, just like any other, needs to be paid off at some point. And as you postpone this payment, interest increases and debt becomes a snowball.