NBFC Vs Banks – Personal Loan from NBFC is Better Option – Know Why

In India, one may avail loans from both banks and non-banking financial companies (NBFCs). Finding the best lender, whether in person or online, can be time-consuming. We’ll compare NBFC and bank personal loans to help you decide.

What does it mean to be an NBFC?

NBFCs are non-bank financial institutions. It can perform bank-like functions as a financial institution. These businesses include lending, investing, and insuring.

Why go to the NBFC for a personal loan?

If you need a personal loan, consider an NBFC.

NBFCs’ success in the unsecured loan market is due to their services. NBFC personal loans feature fewer fees than regular bank loans. An NBFC, one of the best personal loans in India, may lend you up to INR 50,000 for 10 to 7 years with equally spaced instalments (EMIs).

In contrast to traditional banks, applicants for personal loans may discover that NBFCs have more lenient qualifying standards than traditional banks do. A minimum of INR 15,000 in monthly income is required, and applicants must be between the ages of 21 and 55.

Regarding personal loans, the credit score necessary to qualify with most banks is lower than the minimum score required by NBFCs. The NBFC may provide the loan despite the applicant’s low CIBIL score if the applicant has a healthy income and significant professional experience. When time is short, NBFC loans are preferable to those offered by normal banks since the verification procedure for NBFC banks is completed faster.

An increase in the loan amount is often only granted by the financial institution as a percentage of the total amount sought. Despite this, NBFCs are prepared to lend the total amount demanded.

Better service to customers: NBFCs are known for offering exceptional service to their loan borrowers before, during, and after the loan is issued. This has earned them recognition for delivering superior customer service.

The application for and approval of an NBFC personal loan take place entirely online. Therefore, borrowers may be asked to present far fewer supporting documents than they would be for a personal loan obtained through a traditional bank.

Why go to a bank for a personal loan?

Customers will have more faith in a bank if the institution has policies and practises that are trustworthy and consistent. Additionally, banks often provide loan rates and processing fees that are more competitive than NBFCs.

Personal loans from financial organisations ranging from INR 24,000 to 40,000,000 may often be obtained. There is a significant range in the terms and conditions of personal loans made available by financial institutions, ranging from 1 year to 7 years, with annual interest rates ranging from 8.45% to 31.50%.

Borrowers who choose personal loans from banks rather than NBFCs do so intending to reap the benefits listed in the following paragraphs:

Reasonable levels of interest charged

Banks, especially public sector banks, try to provide borrowers with interest rates that are competitive with the market to attract many prospective customers. This is because there are so many possible consumers. Personal loans are made available by financial institutions in the public sector, such as the Punjab National Bank, with interest rates as low as 8.45% per year (PNB).

As money is always available, getting a loan from a bank is simple and uncomplicated

You might get a loan from a bank of up to INR 40 million if you apply for it via the HDFC Personal Loan program. The amount of a loan is determined by some criteria, including the borrower’s qualifications, any collateral offered, and the borrower’s current financial status.

Applications for loans are submitted in a quick and simple online format:

Online applications for personal loans are now accepted by the majority of banks as well as NBFCs. Because the application may now be completed online, the interest rates on personal loans offered by banks have become more competitive.

Pre-approved Loans

The vast majority of financial institutions provide customers with the opportunity to get pre-approved for personal loans from their banking institution. The approval process for these loans is swift, and a minimum amount of documentation is required.

Supplemental Options

The services a bank provides include issuing cheques or demand draughts, accepting deposits of these instruments, facilitating cash withdrawals via automated teller machines, and more.

An extensive network of interconnections

Some financial institutions have hundreds of branches across the country and even the world. Because of this, obtaining a personal loan or any other sort of credit is now far easier than it used to be.

Advantages of maintaining strong relationships

Many individuals already have an operational link with at least one financial institution, whether via the maintenance of a savings, checking, salary, fixed or recurring deposit, etc. account.

Conclusion:

Borrowers of personal loans may benefit from non-bank financial companies (NBFCs) and banks in a variety of ways. Non-bank financial companies, often known as NBFCs, are growing rapidly because they provide customers with interest rates that are more favourable than those offered by banks, which are well-known for their low-interest rates and low administrative expenses. If you need quick and easy access to money, non-bank financial companies (NBFCs) are a fantastic option.

On the other hand, banks are seen as reliable sources of credit, and they sometimes offer borrowers lower interest rates. People who keep their money in financial institutions like banks are eligible for the deposit insurance programme offered by those establishments. Therefore, banks are an excellent choice if you seek a more secure alternative. In addition, it is more advantageous and makes more sense to apply for a personal loan from a financial institution with which you already have a connection.

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