Description
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A lender, via public or proprietary information, feels that a potential borrower is completely credit worthy enough for a certain credit product, and approaches the potential customer with a guarantee that should they want that product, they would be guaranteed to get it. This rarely happens in the financial services industry, and when it does happen, it is usually loaded with fine print that is not immediately disclosed. Usually, what happens is pre-qualification, instead.
Although, to a typical consumer, "you're pre-approved" means "you already passed the approval process and therefore are guaranteed to be immediately granted the loan if you apply," the literal meaning is different. The literal meaning is "at a stage before approval." Thus, pre-approved creates no obligation whatsoever on the lender and no rights whatsoever to the potential borrower. "Pre-approved" is thus a popular advertising catch phrase to induce people to apply for a loan.
Although, to a typical consumer, "you're pre-approved" means "you already passed the approval process and therefore are guaranteed to be immediately granted the loan if you apply," the literal meaning is different. The literal meaning is "at a stage before approval." Thus, pre-approved creates no obligation whatsoever on the lender and no rights whatsoever to the potential borrower. "Pre-approved" is thus a popular advertising catch phrase to induce people to apply for a loan.