Know Benefits And Reasons Of Opting For A Personal Loan From An NBFC - Loan Trivia


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Thursday 11 February 2021

Know Benefits And Reasons Of Opting For A Personal Loan From An NBFC


In a recent RBI declaration, it was stated that NBFCs with asset sizes of Rs.500 billion or more and at least 10years of continued operations can effectively convert to full-fledged banks.

  • Portfolio outstanding for fintech companies and NBFCs increased by 92% y-o-y in December 2019.

  • Personal loans accounted for around 7.4% of this outstanding portfolio, making it the most popular financing segment.

The best NBFCs for a personal loan offer favourable terms, enabling borrowers to repay their dues conveniently. Individuals often find it challenging to decide whether they should borrow from such non-banking financial companies or traditional sources. In many instances, sticking to NBFCs can be a wiser choice due to a plethora of reasons.

Reasons to avail personal loans from NBFCs

Following are just some of the reasons why borrowers should stick to a personal loan from an NBFC.

  1. Quicker disbursals

While traditional lenders often need borrowers to complete several formalities before approving credit requests, NBFCs differ in this regard. One can thus avail funds early and through a convenient process from an NBFC due to streamline financing. Most of the lenders also offer an online application facility, which can reduce the hassles significantly.

One can follow a step-by-step guide to applying for a personal loan for a quick funding request with the lender. Some reputed lenders offer loan disbursals in just around 24 hours* of application, allowing borrowers to finance emergencies using this credit.

  1. Simplified eligibility criteria

The best NBFCs for personal loan offer leniency when it comes to eligibility requirements. These non-banking lenders offer the full principal without collateral, reducing documentation significantly. Also, the credit score requirement is reasonable, enabling individuals to qualify for funding easily.

  • Around 80% of loans are offered to individuals whose CIBIL score is higher than 750.

  1. Competitive rates

Interest rate is one of the primary factors which determine the overall cost of a personal loan. NBFCs are commonly known to offer low interest personal loans when compared to other sources of credit. This difference in interest charges can be attributed to the prime lending rate that NBFCs follow. PLR is not RBI-regulated, which enables NBFCs to charge lower interest rates than other traditional lenders.

  1. Minimal documentation

Documentation is another area where NBFCs reduce borrower hassle. Instead of requiring one to submit several documents supporting income and finances, most of these lenders limit documentation to just a few important ones. 

For instance, one can avail personal loans from NBFCs with documents like his/her KYC, account statements, and salary slips. Still, one must check the important documents required while applying for a personal loan.

  1. Availability of pre-approved offers

Some of the best NBFCs for personal loans also bring pre-approved offers to reduce the hassles of financing. For instance, Bajaj Finserv extends these pre-approved offers to simplify and accelerate the lending process. These offers are available on a range of financial products, such as business loans, personal loans, credit cards, and others. You can check your pre-approved offer by providing your full name and phone number.

An individual can also utilise a personal loan EMI calculator available online to assess the differences between borrowings from NBFCs as against traditional lenders. Keep in mind that even a 0.5% difference in rates can mean significant variations in EMIs and total interest cost.

Consider a loan from a standard lender where the principal is Rs.25 lakh, the interest rate is 12%, and tenure is 4 years. For this credit, EMI would be Rs.65,835. Now, if the principal and tenure remain the same, but the borrower avails this loan from an NBFC offering it at an interest rate of 11.5%, the EMIs would reduce to Rs.65,223.

Thus, keep these considerations in mind when looking for the best personal loan offers. Also, make sure to compare between NBFCs to ensure maximum affordability in terms of interest rates offered and apply with the best NBFC for a personal loan accordingly.

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