Personal loans are becoming the quintessential financial aid which comes handy in the need of the hour. They are easy to apply, have non-stringent eligibility criteria and require minimum documentation. Many lenders are offering an instant personal loan in Delhi and other cities to the applicants at a click of a button. And the fact that personal loan can be used as per the applicant’s discretion makes them even more covetable.
The demand for a personal loan in the country has resulted in many banks and NBFCs offering it at a competitive rate of interest and interesting deals and offers. But the big question arises when one actually thinks of applying for one but finds self confused in the pool of lenders that whether to opt for banks or NBFCs for taking the personal loan.
Here is a jot down of some key points which one must keep in mind when they apply for a personal loan.
A personal loan from Banks
Banks are guided and regulated by the Reserve Bank of India which have stringent rules and regulations for approving loan applications. The applicant ought to have excellent credentials and must abide by the eligibility criteria as laid by the bank. The loan processing time for personal loans is lengthy and hence one may not be able to avail instant personal loans from banks. Banks also charge high prepayment charges and foreclosure charges. Their processing fees is also significantly high.
A personal loan from NBFC:
NBFCs are emerging personal loan providers in the country. They are regulated by the Companies Act and do not have strict guidelines and regulations pertaining to the personal loan application process. They do not seek an excellent credit score and mainly take your KYC and financial credentials into consideration. They are more liberal in their approach and have easy eligibility criteria and fewer documentation requirements. One can get instant personal loan approval and loan disbursal within 24 hours through NBFCs. With good credentials, one can negotiate for processing fees and other charges and may get them completely waived off as well.
Most NBFCs are technologically driven and use customer friendly and innovative techniques to lure the borrowers. When opting between a bank or NBFC, one should consider the following pointers which are viz.
- The urgency of funds: Banks usually take considerable loan processing time as they are strict in following the steps of the loan application. On the contrary, NBFCs are quicker in their approach and approve loan application rather quickly. Thus, if you are in dire needs of funds and cannot wait longer, then opt for NBFCs for a personal loan.
- Credit score: Personal loans and credit score goes hand in hand. A good credit score signifies quick personal loan approval and competitive credit score whereas a poor or low credit score means your personal loan application getting rejected or higher rate of interest on the loan. Some lenders are strict about the credit score and do not offer loans if the applicant doesn’t have the requisite credit score. While some NBFCs are liberal and offer personal loan to the borrowers with not so good credit score as well.
- Rate of interest: Banks have their benchmark interest rate revolving around the base rate plus the margin whereas the NBFCs have their interest rate defined by RPLR-Spread. Banks usually do not negotiate much on the rate of interest that they offer whereas NBFCs offer a competitive rate of interest on the personal loan and also negotiate if the applicant poses an excellent credit score.
In today’s changing times where technology and digitalisation have taken over the traditional methods of banking, NBFCs are slowly getting the popularity because of their product offers flexibility and ease of working. Fintechs like LoansJagat acts as an ultimate platform wherein the borrower can compare different lenders for their offerings in terms of rate of interest, loan amount, loan tenure, processing charges etc. Their network encompasses 40 key lenders including leading banks and NBFCs. One can choose the lender by comparing different parameters and get oneself a loan by applying through their portal directly. It is thus not a herculean task anymore to choose the lenders but indeed a very crucial one as this lender-borrower relationship goes a long way in defining your credibility and future loan prospects.