What is a Bank?
A Bank is a Financial Institution that accepts money from an individual, protects it, and lends it to others to generate profit for themselves. They also offer other financial services like CASA, Money Transfers, and several Investment options.
These Banks offer a sum of money, i.e. called a Bank Loan, where the borrower agrees to pay back the loan in a stipulated period of time. In return for the sum of money, borrowers pay an interest rate to the bank.
What is an NBFC (Non-Banking Financial Company)?
Non-banking Financial Companies (NBFC) are RBI-licensed financial companies registered under the Companies Act of 1956. They are known for their unique customized loan products, convenient loan process and quick loan amount disbursals.
Comparison between NBFC Personal loans & Bank Personal Loans
|
Aspects |
NBFCs |
Banks |
|
Interest Rate |
Higher, due to unsecured nature |
Lower, due to the secured nature |
|
Eligibility Criteria |
More flexible eligibility criteria |
More Stringent eligibility requirements |
|
Credit Scores |
Provide loans even, in case of a low credit score |
Provide loans with a good credit score, higher than 750+ |
|
Paperwork/ Documentation |
Minimal Digital Documentation- digital KYC |
Lengthy paperwork & documentation required like salary slips, bank statements, ITR, etc |
|
Mode of Application |
100% Digital Process |
Face-to-face / In-person |
|
Customer Service |
24/7/365 customer assistance is available |
Available during Business Hours / Days |
|
Loan Processing / Approval |
Faster Loan approval in minutes |
Slower Loan approval usually takes 2 to 7 days |
|
Customized Personal Loans |
Offer customized and cause-oriented personal loans to their customers |
Offer standard personal loans. Customization is limited |
|
Collateral Requirement |
NBFCs do not hold deposits/Collateral for security |
Banks may ask for Collateral |
|
Loan Amount |
Provides you Higher amount |
Limit Loan amount, usually based on Documents provided |
|
Processing Fees / Hidden Charges |
May have higher processing fees and late repayment charges |
More transparent processing terms and fee structure |
|
Loan Tenure |
Shorter Loan Tenure |
Longer Loan Tenure |
Conclusion
In conclusion, NBFC personal loans emerge as a favorable choice for borrowers seeking quick, flexible, and customer-centric financial solutions. Whether you're facing unexpected expenses or planning for significant life events, NBFCs stand out for their efficiency and responsiveness. Their commitment to innovation and customer satisfaction makes them reliable partners in achieving financial stability.
For those considering a personal loan, exploring NBFCs could provide a hassle-free and efficient borrowing experience. From application processing and inclusive eligibility criteria to tailored loan solutions and innovative customer benefits, NBFCs offer a comprehensive set of advantages to enhance the borrowing experience. Their ability to offer instant approvals, minimal documentation, and customized loan options ensures that borrowers can meet their financial goals without unnecessary delays.
How did you find this blog? Do let us know in the comments section.
Source Link: NBFC Personal Loan vs Bank Loan: Which Is Better?