Availing personal loans in India is no more a tough task if you can meet the eligibility criteria.
However, many prospective loan borrowers are often confused about whether to apply for a personal loan with a bank or a non-banking finance company (NBFC).
If you are also one of those loan borrowers facing such a situation, then you are not alone.
According to many financial research and studies conducted in India, it is proved that NBFCs have a considerable edge over banks.
The better performance from NBFCs has propelled a rise of 15% in customer satisfaction as compared to banking customers. Even the RBI has agreed to such evidence as per its recent Financial Stability Report (FSR).
Banks in India are incorporated by the Banking Companies Act, whereas NBFCs are incorporated by the Companies Act, 1956. Both offer similar services except demand deposits, demand drafts, cheques issuing and more, not allowed by NBFCs.
Why consider NBFCs over banks for personal loans
- Higher loan amount
A leading nationalized bank may offer an instant personal loan of up to Rs.20 lakh, whereas a reputed NBFC can let you borrow up to Rs.25 lakh. Hence, opting for personal loans from an NBFC can help you cover more needs as compared with banks.
- The interest rates
Compared to banks, NBFCs have now focused on personal loan interest rates and are taking measures to bring it down than banks. Since personal loans are unsecured, they carry a bit higher interest rate. But, you can also bring it down if you have a better CIBIL Score, repayment and income history. Still, a personal loan for low CIBIL Score will be available at a higher rate of interest.
- Quick processing
Compared with banks, NBFCs take less time to process, approve and disburse the personal loans. Once you have matched the required loan eligibility with that of the lender, it may take around 5 minutes to approve your online loan application. After getting the approval for the loan, you may get the money disbursed within 24 hours. It makes the NBFCs the preferred mode of funding as they rise to your expectations when needed.
- Personal loan for low CIBIL Score available
Banks are strict in approving the loan applications of only such candidates with a good CIBIL Score and financial stability. On the other hand, personal loan for low CIBIL Score is approved by NBFCs. The only difference is that since the lender will have a higher risk on it, it will be offered at a higher interest rate. This way, the individual looking for a loan will get the funds, and the NBFC will minimize the default risk with a higher interest rate.
Some of the advantages of applying for personal loans via NBFCs are now discussed. As per your financial profile and needs, you can apply for it with a bank or NBFC.
One of the leading lenders such as Bajaj Finserv offers personal loans, home loans, business loans, and other financial products. It is to make your overall loan procedures hassle-free and fast.