NBFCs offer quicker, flexible loans than banks

Non-Banking Financial Companies (NBFCs) provide loans similar to banks. However, they operate under different rules and do not have a banking license issued by the Reserve Bank of India (RBI). NBFCs can help people and businesses get loans without the strict requirements banks impose. An NBFC personal loan is offered for various needs. These companies focus on customers who might find it hard to get loans from banks due to lower credit scores or complicated paperwork. Some NBFCs focus on specific areas, like vehicle loans, personal loans, and even microfinance for small loans. The process to get an NBFC loan is usually faster and easier. Applicants can apply online and receive approval quickly, sometimes within minutes. Interest rates start at about 10.5%, which can be a bit higher than banks. However, the less rigid criteria allow those with lower credit scores to qualify more easily. In comparison, banks require more documentation and have stringent eligibility criteria. They generally check for stable income and a good credit history, typically over 700. The loan approval process can take several days, making it slower than NBFCs. NBFCs offer loans with varying amounts and flexible terms, ranging from six months to five years. In contrast, banks usually provide larger loans but with tighter restrictions. Interest rates tend to be lower at banks, often between 8% and 18%. When choosing between an NBFC and a bank loan, consider your needs. If you want quicker approval and less paperwork, NBFCs might be suitable. But if you prefer lower interest rates and larger loans, banks could be the right choice. In the end, it depends on what is most important for your financial situation.