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.
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.
|Year||NBFC||Private Banks||Public Sector Banks||Total Amount Lent|
The table below shows the difference between personal loan taken from banks vis-à-vis NBFCs.
|Loan Application||The borrower has to visit a branch with all documents to apply for a loan.||The loan application process is usually online through the NBFC’s website or app.|
|Time||Loan processing takes time with many checks and balances.||Loan processing and disbursal are quick.|
|Flexibility||Bank loans are usually standard with little or no scope of negotiation.||Few conditions are negotiable with flexible repayment options.|
|Processing Fees||Considerably lower – 0.5-2%.||Typically ranges between 1-4%.|
|Interest Rates||Interest rates are comparatively lower if the credit score is good.||Higher interest rates than banks.|
|Loan Amount||Up to ₹20 Lakh|
|Interest Rate||9.9% to 45% p.a|
|Tenure||Up to 72 months|
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:
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.
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.·
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.
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.
Navi has a smooth loan application process. You just have to download the app and apply for a cash 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.
Ans: The interest rates vary from one borrower to another, but Navi’s interest rates are quite affordable. A borrower has the freedom to select the EMI amount as well.
Ans: You have to download the Navi app and apply for a loan from there.
Ans: Navi offers personal loans ranging from Rs. 10,000 to Rs. 5,00,000 without asking for any collateral or guarantor.
Ans: Once you apply for a loan on the Navi app, the team takes 10 minutes to approve and sanction the loan. The loan amount is disbursed on the same day.
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