NBFCs give out Personal Loans, but it is important to learn the intricacies of such loans before choosing one. You can also get NBFC Personal Loan for bad credit if you understand the procedure and Personal Loan rules and regulations in India.
Traditional banks have been the go-to option for consumers seeking a personal loan for a very long time. However, the situation has changed recently as non-banking financial companies (NBFCs) have emerged as strong contenders. NBFCs have several benefits that make them a desirable option for borrowers looking for personal loans.
Banks or NBFCs: Which Is Ideal Applying For Personal Loans?
Personal loans are easily available with multiple options to choose from. In the traditional bank approach, applicants can also choose to go with Non-Banking Financial Companies or NBFCs. These financial institutions do not need a banking license but are regulated by the Reserve Bank of India just as a bank.
Difference Between Personal Loans From NBFCs and Banks
Banks and NBFCs offer personal loans, but the market share of NBFCs has risen exponentially over the past few years.
NBFCs adopted simpler loan approval processes, in sharp contrast with stringent norms followed by banks. NBFCs and banks follow different benchmarking systems for personal loans. While bank rates would mostly be determined by the Reserve Bank of India’s policy rates, NBFCs have greater flexibility over their interest rates because of internal benchmarking.
What Is A Personal Loan?
How Is My Loan Eligibility Calculated?
Loan eligibility is dependent on primarily the following factors:
- The company where you work. Every bank has a list of companies running into thousands which they have categorized depending on the credentials and financials of your employer. The higher the category the higher the loan eligibility chances.
- Quantum of loans and credit card outstanding that you already have. Typically a bank will not give a loan if the total EMI obligation exceeds 50-75% of your total net take-home salary.
- Your gross/net salary
- Your credit score is reflected in your CIBIL or Equifax report. Having a good credit score is a necessary but not a sufficient criterion.
Easy NBFC Personal Loan Eligibility Parameters
The NBFC loan eligibility criteria are as follows:
The minimum age should be at least 22 years at the time of applying for NBFC Finance.
The maximum age at maturity of the loan should be less than 58 years.
The applicant may have at least one year of work experience.
The applicant must be an Indian resident to avail of the NBFC loan.
Salaried employees working with a government organization, private firm, or multinational company can apply.
Why Opt For NBFC For Personal Loans
Can apply for a personal loan online, helping them scan rates offered by various NBFCs for the best deal. Complete a few basic details, a customer can complete the entire application process online.
NBFCs have more flexible making them approve personal loans faster. A customer can receive approval for personal loans in a very short time, compared with the time taken by banks. The bank loan process takes anywhere between a few days and a few weeks. NBFCs can process a loan application within 24 hours after the approval.
How Do NBFCs Have The Edge Over Banks?
NBFCs have become a popular choice among borrowers. Instant amount transfer and comfortable application procedures add a cherry on top. But, banks are still offering competition to emerging NBFCs with their regulated plans and policies.
Eligibility and Processing
Banks are very particular about the fulfillment of the borrower eligibility criteria. Loan requests are mostly for people who need immediate capital. Banks with their stringent loan policies and rigid terms and conditions take time to process loan requests due to repeated background and account creditworthiness checks.
NBFCs facilitate quick money transfers with minimum documentation. Eligibility requirements lead to an easy loan-granting procedure. NBFCs to avoid repeated checks and make instant transactions.
Inferior Credit Ratings Won’t stop Borrowers
Poor credit ratings might result in the rejection of loan applications by banks. Banks, under the regulation of the RBI, don’t sanction loan applications if the applicant’s credit rating is below 600 as they fear that the individual is a high-risk candidate. This is not the case with NBFCs. You can apply for personal loans.
Fluid Rules and Regulations
Under the Companies Act, the rules and regulations with NBFCs are somewhat lenient in comparison to the strict bank policies governed directly by the RBI. Though there is a slight chance of default, NBFCs have managed to fair out effectively well in the past few years. They are perfect examples of systematic money transfer and management without rigid and unmoving rules.
Benefits Of Taking Personal Loans From NBFCs In India
You have several advantages of taking a Personal Loan from an NBFC as compared to a bank.
Most banks are bound by legacy procedures, rules, regulations, and guidelines laid down by the Reserve Bank of India for assessment. They follow various rules to assess eligibility, documentation, and creditworthiness and then finally approve and disburse the loan. It can easily take 1-2 weeks to get your money in your account.
Easy With Credit Score
Getting a loan is easier with a good credit score, but NBFCs are generally more flexible than banks when it comes to credit scores. They may sometimes offer personal loans to individuals with lower credit scores or even those with no credit history, as they have an inbuilt mechanism to review the customer profile.
NBFCs provide better customer service to their customers during and after the stages of loan approval and disbursement. Borrowers can view loan status and enable notification on the installment deadline.
Flexible Loan Option
NBFCs may offer more flexible loan options than banks, such as longer repayment tenures or the option to choose between fixed or variable interest rates. If you are unable to manage a fixed EMI, choosing this type of loan may be a better option for you.
A borrower with a poor credit score is usually not entertained by banks, and his/her loan application is rejected, which further lowers the credit score. NBFCs are subject to certain scrutiny, extra documentation, and a higher interest rate.
On instant personal loans, NBFCs can offer a competitive rate of interest. Due to the competition in the market and for promoting financial services, they offer reasonable interest rates.
What is NBFC?
NBFC or Non-Banking Financial Company is a financial institution that provides banking services without requiring to hold a bank license. NBFC is a company registered under the Companies Act, and regulated by RBI.
Can NBFC provide a Personal Loan?
Yes, Non-Banking Financial Companies can provide Personal Loans.
What are the new rules for NBFC?
NBFCs are required to hold a 0.25% reserve. for outstanding loans on personal home loans and loans to small and micro businesses.
Which NBFC in India provides personal loans for salaries?
There are various NBFCs that offer Personal Loans for salaries, with varying interest rates, fees, and levels of customer service.
How much loan can I get from NBFC?
The eligibility criteria set by the NBFCs, you can get a high loan amount of up to Rs. 50 Lakh.
Is it safe to take a loan from NBFC?
Yes, it is absolutely safe to take a loan from NBFCs. You must ensure to visit a secure website while applying for a loan.