Top 4 Benefits Of Taking Personal Loans From NBFCs In India

Personal Finance

NBFCs are Non-Banking Financial Companies that are in the business of lending to retail and corporate borrowers. Typically, when a borrower has trouble getting a loan from any conventional commercial bank, they turn to these NBFCs. This is because these NBFCs are less stringent and finance the whole loan amount. On the flip side, if the loan amount is higher, the bank usually sanctions a percentage of it, and the borrower has to arrange the remaining.

Also, getting a bank loan is a tedious process and involves much documentation, unlike an NBFC. NBFCs are considered less stringent than banks as they don’t do strict credit checks. Loan processing time is another advantage with NBFCs as loan application approval, or rejection decisions take minutes. NBFC personal loan is also unsecured, i.e., without any collateral or guarantor, which is very rare in banks’ loans.

Personal Loans Disbursal: Banks vs. NBFCs

The table below is for a comparative study of personal loans being disbursed (in crores) by NBFCs, private sector banks, and public sector banks in India over the last few years. You can see the percentage increase of personal loans disbursed by NBFCs is 286% from FY16 to FY18-19. And the percentage increase is 73.1% for private banks and 140% for public sector banks in the same period.

Difference between Loans from NBFCs vs. Banks

The table below shows the difference between personal loans taken from banks vis-à-vis NBFCs.

Benefits of Personal Loans from NBFCs

There are many advantages and benefits of taking an NBFC personal loan over any commercial bank (be it a private bank or a government-owned bank)loan. These benefits are listed below:

• Credit Score:

  A borrower with a substandard credit score is usually not entertained by banks, and his loan application is rejected, which further lowers the credit score. However, these borrowers can quickly get a loan from an NBFC as they have certain loan products, especially for them.

• Quicker Turnaround Time:

  The eligibility criteria and application scrutiny are less stringent in NBFCs than in traditional banks. If you are looking for a loan in an emergency, then NBFC is the best bet.·

• Loan Amount:

  Banks usually do not sanction the entire loan amount. They approve a certain percentage of the loan amount. However, NBFCs approve the whole loan amount without putting any restrictive covenants on the loan. Thus, if you want a big loan, then prefer to approach an NBFC.

• Customer Service:

  NBFCs offer better customer service to their customers during the loan approval and post-disbursal stages. Borrowers can view the loan status, and enable notification on the instalment deadline. 

Also read: Personal Loan Application For Self-Employed Individuals: A Step-By-Step Guide

Why Choose Navi?

Navi has a smooth loan application process. You just have to download the app and apply for a personal loan by sitting on your couch. Fill out a small loan application form, and enter your income details and PAN number. Navi will process your loan application in 10 minutes. Another good part is that Navi only asks for 3 documents only i.e, your PAN card, Aadhar card, and a photograph. With just a few clicks on your smartphone, you can get an easy personal loan of up to RS. 5 lakhs. The interest rates of personal loans offered by Navi are also relatively meagre. A borrower can also prepay the personal loan if he wants that, too, with no extra charges or penalties in case of a personal loan through Navi. He can also choose the EMI amount while applying for the loan at his convenience, making it the best NBFC for the personal loan.

Also read: NBFCs personal loan interest rates in 2022

Frequently Asked Questions

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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.