Pros & Cons of Availing a Loan from NBFC vs Bank

The decision to avail of a loan should not be taken lightly. There are a lot of factors to consider, such as the interest rate, repayment terms, and the overall cost of the loan. But one of the most important decisions is whether to go with a bank or a non-banking financial company (NBFC). Each option has its pros and cons, so it’s important to do your research before deciding. Read on to discover NBFC vs bank home loan key differences, so you can make the best choice for your needs.

NBFC vs Bank Home Loan

There are many factors to consider when deciding whether or not to take out a loan from an NBFC vs a bank home loan. The most important factor is probably the interest rate you will be charged. Banks typically have lower interest rates than NBFCs. However, you should also consider the fees associated with taking out a loan from either type of lender. Some banks charge higher fees than NBFCs. You should also think about how much money you need to borrow and how long you will need to pay back the loan. If you’re looking for a personal loan, it’s worth considering an NBFC over a bank. 

Pros of NBFC vs Bank Home Loan

There are several reasons one might choose to avail of a loan from an NBFC vs bank home loan. Some of the key advantages include the following:

1. Quicker approvals and disbursements: NBFCs typically have a quicker turnaround time when it comes to loan approvals and disbursements. It is especially helpful if you need urgent funding.

2. More flexible repayment options: NBFCs offer more flexible repayment options than banks. It gives borrowers the much-needed flexibility to repay the loan at their convenience.

3. Competitive interest rates: NBFCs usually offer competitive interest rates on loans, which helps keep the overall cost of borrowing down.

4. Option for collateral-free loans: Many NBFCs offer collateral-free loans, which is a huge benefit for borrowers with no assets to pledge as security against the loan amount.

5. Doorstep service: Most NBFCs offer doorstep service, which means that representatives will come to your home or office to pick up documents and complete other formalities related to the loan application process. It is extremely convenient for busy individuals who cannot spare the time to visit a bank branch during working hours.

Cons of availing a loan from NBFC vs Bank

There are a few differences between taking a loan from NBFC vs bank:

1. Interest rates tend to be higher with NBFCs.
2. Banks usually have more stringent eligibility criteria, so it may be harder to qualify for a loan from a bank.
3. Banks typically require collateral for loans, while NBFCs may not.

Here are some of the specific cons of taking out a loan from an NBFC:

• NBFC is more likely to have higher interest rates than banks.
• You may have to provide collateral when borrowing from an NBFC.
• The loan approval process may be slower.
• There may be hidden fees. Therefore, you must thoroughly scan the terms and conditions. 

Conclusion

While banks offer lower interest rates on loans, NBFCs are a better option if you have bad credit or are looking for quick approval. With that being said, it’s ultimately up to the borrower to decide which type of lender is best for their needs regarding NBFC vs bank home loan. If you are looking for a business loan NBFC, the information mentioned above will help you make an informed decision. Weighing up the pros and cons of taking out a loan from an NBFC is essential before making any final decisions.