What preapproved loan offers by mail mean + what to do with them

What preapproved loan offers in the mail mean

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You received a preapproved loan offer in the mail. Here’s what it is and what your next step should be.

Snail mail can come with all kinds of trash. We’ve all stood by the mailbox and ripped up those free all-expense-paid trips for two before promptly recycling them. Among the bills, postcards and letters, sometimes there are mail offers from financial institutions that boldly announce you’ve been preapproved for a loan.

Offers can be from a bank you’re affiliated with or even a lending company you’ve never heard of. It can be hard to tell what’s real and what isn’t, so learning how to spot a scam is the first step in avoiding a phony preapproved loan.

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    What exactly are preapproved loan offers?

    The loan offers you receive in the mail typically contain an online code or a form for you to complete to apply for a loan. The hook is that you’re already preapproved for a specified amount. It can be anywhere from several hundred dollars to tens of thousands of dollars.

    Despite what we call it, “preapproval” does not guarantee that you’ll get a loan if you apply. When companies extend these offers, they do so with cursory information from either a third party or a soft credit pull. These lenders have determined that you meet the eligibility criteria and might meet the financial requirements. Their information for you may be out of date, which means you may not actually be able to receive the advertised financing.

    What is a soft credit pull?

    A soft pull is an inquiry into your credit history that doesn’t affect your credit score. Credit card providers and other lenders often conduct soft pulls of your credit without you knowing it, usually to determine whether you’re a good candidate to borrow money. Preapproval and credit card offers are often a result of these soft pulls on your credit.

    Why do companies send out preapproved loan offers?

    Preapproval letters are proven marketing tools. For banks and credit unions you have an existing relationship with, it’s an attempt to bring their way even more of your business. It lets you know that the product exists and that you may be able to get a loan should you need it.

    You can also receive letters from banks that you’ve never done business with or lenders you’ve never heard of. These providers are likely attempting to raise brand awareness. In other words, the offers you’re being sent are a way for them to get more exposure and potentially get more customers.

    The most basic point of the offer is to attract more borrowers, whether you know the lender or not.

    Is a preapproved loan offer worth pursuing?

    If you have the time and are willing to do some research, it could be worth pursuing a preapproved loan offer.

    Perhaps the offer is a preapproved loan for up to $15,000 with a decent interest rate. If you’ve had a major purchase on your mind or if you’re considering debt consolidation, it could be rather tempting.

    However, an offer by mail may not be the best you can get, which means you could benefit from fully comparing your options online before diving in on it. You’ll also want to make sure you check to see if the lender is legit. Some scams look like the real deal but end up fake, so always do your research before you hand over any of your personal information.

    How can I tell if this offer is a scam?

    There are several warning signs to look out for when it comes to loan scams. If the lender is offering a 100% guarantee, doesn’t have contact information or wants an upfront fee, stay far away. Scammers are notorious for pulling these tricks on people who may not know better.

    The best way to avoid a scam is to familiarize yourself with what a real loan offer looks like and learn about common loan scams.

    Are mailed offers the same as what’s online?

    Not always. There are differences in the rates offered by mail and those offered online. As to which is better, it depends on the lender. Some have better online rates, while others offer attractive deal in letters to get you to apply.

    Both use preliminary information about your finances to determine preapproval. Neither guarantees a certain rate or even if you’ll be offered a loan once you submit a full application. This means that you’ll still have to go through the full application process either way and will likely have to submit to a hard credit pull so the lender can confirm that you’re a good borrower.

    Compare your letter offer to online lenders to see if you’ve got a good deal

    Rates last updated August 16th, 2018

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    Unfortunately, none of the personal loan providers offer loans for that credit score. If you are in urgent need of a small loan, you might want to consider a short term loan.
    Name Product Product Description Min. Credit Score Max. Loan Amount APR
    LendingClub Personal Loan
    A peer-to-peer lender offering fair rates based on your credit score.
    6.16%–35.89% (fixed)
    SoFi Personal Loan Fixed Rate (with Autopay)
    No fees. Multiple member perks such as community events and career coaching.
    7.075%–15.365% (fixed)
    Even Financial Personal Loans
    Get connected to competitive loan offers instantly from top online consumer lenders.
    4.99%–35.99% (fixed)
    NetCredit Personal Loan
    Check eligibility in minutes and get a personalized quote without affecting your credit score.
    34%–155% (Varies by state) (fixed)
    Best Egg Personal Loans
    A prime lender with multiple repayment methods.
    640 FICO®
    5.99%–29.99% (fixed)
    Credible Personal Loans
    Get personalized rates in minutes and then choose a loan offer from several top online lenders.
    Good to excellent credit
    4.99%–36% (fixed)
    Monevo Personal Loans
    Quickly compare multiple online lenders with competitive rates depending on your credit score.
    3.09%–35.99% (fixed)
    FreedomPlus Personal Loans
    Consolidate debt and more with these low-interest loans. Cosigners welcome.
    4.99%–29.99% (fixed)
    OppLoans Installment Loans
    Installment loans with competitive rates from a top-rated direct lender.
    Bad credit accepted
    99%–199% (fixed)
    OneMain Financial Personal and Auto Loans
    An established online and in-store lender with quick turnaround times. Poor credit is OK.
    16.05%–35.99%* (fixed)

    Compare up to 4 providers

    Advantages of preapproved loan offers

    If you’ve got a mailed offer in your hands and aren’t sure whether you want to apply, consider these points when making your decision.

    • Have a higher chance of being approved. When you receive a preapproved loan offer in the mail, the lender has already done some basic data pulling to see if you’re a good candidate for a loan. This means you’re more likely to be approved once you apply.
    • Quicker application process. Preapproved offers typically shorten the application process by prepopulating the application form once you’ve entered your unique offer code.
    • Learn about new lenders. If you didn’t already know of the lender, you may learn about a new provider that fits your needs. You get the loan you need and the lender gets a new customer — it’s a win-win situation.

    What to watch out for

    Accepting a mailed offer just because you’re preapproved might not be the most sound idea. You’ll want to be cautious to be sure the offer isn’t a scam.

    • It could be a scam. There’s always the chance that the preapproved loan offer you got in the mail isn’t legit. In this case, applying could mean giving away your personal information or paying for a loan that you never receive.
    • Might not be the best deal. While not as bad as a scam, you could get a better interest rate from another lender. It’s worth applying for other loans and seeing your potential rates and terms when comparing loan options.

    Bottom line

    Preapproved loan offers are a form of advertising that’s becoming archaic. If you’re in the market for a personal loan, it’s worth it to compare your options online and do a little research. A mailed preapproval might be convenient, but it could also be costly if you accept an offer without knowing the lowest rate you could qualify for.

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    US Personal Loans Offers

    Important Information*
    Even Financial Personal Loans

    Get connected to competitive loan offers instantly from top online consumer lenders.

    Prosper Personal Loans

    Borrow only what you need for debt consolidation, home improvements and more — with APRs based on overall creditworthiness.

    LendingClub Personal Loan

    A peer-to-peer lender offering fair rates based on your credit score.

    SoFi Personal Loan Fixed Rate (with Autopay)

    No fees. Multiple member perks such as community events and career coaching.

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