Why Choose a Personal Loan from an NBFC Over a Bank?

Personal loans are not just the preferred form of borrowing for individuals; they are also a preferred form of lending for financial institutions today.

And with increased preferences given to those who apply for a personal loan, many are spoilt for choice.

Personal Loan Disbursed By Banks & NBFCs

A decade ago, private and public sector or informal lenders were all that you had when you wanted a loan. Things have changed significantly with NBFCs, even though late entrants to the lending game have made considerable progress in the last 10 years. Take a look at this lending data sourced from credit bureaus from FY16 to FY18-19 until September 2018.

As a borrower, you may be confused as to what type of financial institution is best for you to apply for a personal loan. Should I take a person loan from a private bank or a public sector bank? What about an NBFC? Should I approach a fintech?

In this article, we’ll help you decide the best place to get a personal loan. For the sake of brevity and to avoid overwhelming you with too much information, we will focus on the two major types of financial institutions: Banks and non-banking financial corporations (NBFCs).

Eligibility of NBFC Personal Loan

Those who meet specific eligibility requirements can obtain personal loans from NBFCs. These requirements may differ significantly depending on the NBFC, but some common factors include age, income, credit score, ,employment status, etc.

Applicants must be at least 21 years old and no older than 60 years old at the time of loan maturity. The minimal income criterion may also vary; however, candidates should generally have a consistent source of income and meet the NBFC's income criteria. A solid credit score of 750 or above is required to qualify for a personal loan because it reflects the borrower's capacity to appropriately manage the repayment. Certain NBFCs may additionally require applicants to be employed for a specified period of time, usually at least six months. When applying for an NBFC personal loan, it is critical to review the NBFC's specific eligibility criteria to ensure that you meet all of the requirements.

Benefits of NBFC Personal Loan

NBFCs provide personal loans, which might be an ideal choice for people who need funds quickly. Unlike traditional lending institutions, NBFCs have more flexible lending standards and can provide personal loans to those with decent credit scores. Also, you can use a personal loan for any application you need, from medical emergencies to travel requirements, from wedding finances to home loan down payments.

NBFCs may also provide personal loans with more flexible repayment terms, such as longer repayment durations, affordable interest rates, and no prepayment penalties. These advantages can make personal loans from NBFCs an appealing alternative for people who need money urgently. Overall, NBFC personal loans might be a great solution for those who require quick access to finances and prefer more flexible payback terms.

Must Read: Why Prefer Reputed NBFC as Personal loan provider

Difference Between Banks & NBFCs

Must Read: What is an NBFC? What Are The Different Types Of NBFCs?

Why You Should Apply for a Personal Loan with an NBFC?

As a borrower, you have several advantages of taking a personal loan from an NBFC compared to a bank. Here are two major ones.

Faster Processing

Most banks are tied by legacy processes, rules, regulations and guidelines set forth by the RBI to assess eligibility for personal loans. From the moment you apply for a personal loan, they have to follow various rules to assess eligibility, documentation, creditworthiness and then finally to approve and disburse the loan. It can easily take 1-2 weeks for you to receive the money in your account.

Must Read: How To Apply For a Personal Loan

On the other hand NBFCs are known for faster loan processing and approval because they have more room for being flexible with norms. Typically, an online SMFG India Credit personal loan can be approved within a few minutes if you meet all the personal loan requirements. You can easily apply for personal loan from the comfort of your home.

Less Stringent with Credit Scores

It’s very difficult to get a personal loan with a bank if your CIBIL credit score is below 700. In fact, due to bad loans piling up, some banks have become even stricter and don’t even consider anything less than 750. Meanwhile, NBFCs are not rigid in assessing your creditworthiness just on the basis of your credit score. You can still have a fighting chance with a credit score of 600-650, though the loan may cost a little more than expected.

Some forward thinking NBFCs and Fintech companies are now looking beyond credit score and credit history to assess a loan applicant. They are using artificial intelligence (AI), machine language (ML) and social media quotient to assess an individual’s creditworthiness. NBFCs will be the first to adopt these new age lending techniques and processes compared to banks.

Why Choose SMFG India Credit Personal Loans?

Now that you know that NBFCs are a better choice for personal loans. Know that it’s also important to select the right NBFC to apply for a personal loan. Go beyond interest rates and processing fees, and look at the customer service, rating, processing speed and credibility of your lender.

You can rely on SMFG India Credit for your personal loans as it is one of the leading NBFCs in the country, awarded the Retail NBFC of the Year by Outlook magazine for two consecutive years in 2017 and 2018. With flexible terms and attractive interest rates, you can apply for a personal loan up to 20 lakh with tenure of up to 60 months with SMFG India Credit personal loans.