Navigating the NBFC route for personal loans: A better choice

Finding the right loan in the bustling bazaar of India’s financial market can feel like searching for a needle in a haystack. What if, however, a positive aspect could be found, especially for those grappling with bad credit? That’s where NBFC personal loans for bad credit come into play. They’re not just loans but lifelines for those who’ve hit a rough patch on their credit journey. 

This article will uncover why these loans could be your path to monetary security. So, buckle up and get ready for an insightful ride into the realm of NBFC personal loans!

Understanding personal loans

Personal loans are loans that help you pay for unexpected costs or make your dreams come true. You can get these loans without putting up any collateral because they are unsecured. The most important things about personal loans are that they can be used in various ways, have fixed interest rates, and set repayment periods.

Choosing the right lender is crucial when it comes to personal loans. Lenders can offer very different terms, interest rates, and other benefits. Because of this, making an informed choice can make the loan easier to handle and save you a lot of money in the long run.

At this point, you might be thinking about where you can apply for a personal loan. Right there is where Non-Banking Financial Companies (NBFCs) shine. Most of the time, NBFCs are the best for personal loans because they focus on the customer, process loans quickly, and offer flexible terms. People who don’t fit the rigid criteria of conventional banks are just one of many types of customers they assist. 

NBFCs are ready to help you with a personal loan that fits your needs, whether you’re planning a dream vacation or having a sudden cash flow problem. 

What are NBFCs?

When a financial institution offers banking services but does not hold a banking licence, it is known as an NBFC. Because these businesses aren’t bound by the same rules and laws as traditional banks, they can offer a wider range of financial products. 

NBFCs are very important to the economy because they give credit to areas that aren’t getting enough of it. This makes financing easier for more people to obtain.

The main difference between NBFCs and traditional banks is how they work and how they are regulated. In contrast to banks, NBFCs are unable to accept demand deposits or issue checks drawn on their own accounts. 

Different NBFCs have different ways of getting money, different risk profiles, and different types of customers. NBFCs usually focus on areas that traditional banks don’t cover, like microfinance, personal loans, and vehicle financing.

Advantages of NBFC personal loan 

Faster loan approval process

One big benefit of getting a personal loan from an NBFC is how quickly the loan is approved and sent to the borrower. NBFCs can process loan applications faster than traditional banks because they don’t have to follow as many rules and focus on using technology. People in a hurry for cash find them particularly attractive for this reason.

Less stringent eligibility criteria

In comparison to more conventional banks, NBFCs often have more lenient standards when it comes to individual loans. Thus, it is possible to get a loan even if you have terrible credit or no credit history at all. NBFCs are a good choice for a wider range of borrowers because they are open to everyone.

Flexible loan terms and repayment options

Another big benefit of borrowing from an NBFC is that you can be flexible with the loan terms and how you pay it back. They often offer more personalised financial solutions to meet the needs of each borrower, such as flexible payment plans that take into account the borrower’s ability to pay. 

This focus on the person helps borrowers better handle their money and lowers the chance that they won’t pay back the loan.

Competitive interest rates

Personal loans from NBFCs typically have lower interest rates than those from banks. This is possible because NBFCs are not subject to the same rules as banks, which gives them more freedom in choosing the terms of their loans. 

Loans with lower interest rates are preferable because borrowers can save a significant amount of money in the long run.

Also read: The pros and cons of investing in floating-rate fixed deposits 

Higher loan amounts

In some cases, people may find that NBFCs are more willing to lend more money than traditional banks. For people who need a lot of money to pay for big things like weddings, home improvements, or school, this is especially helpful. NBFCs tend to lend money in a more personalised way, which can lead to better loan terms for the borrower.

Transparent and competitive charges

NBFCs are renowned for their straightforward approach to personal loan fees. With few exceptions, their pricing structures are transparent and include fair prices with no surprises. This honesty helps people who want to borrow money figure out the exact cost of their loan, so there are no surprises later on.

Drawbacks for taking loans from NBFCs

While NBFCs have many advantages, there are some risks associated with getting a personal loan from them. Here are some things to think about:

1. No overdraft facility: NBFCs don’t offer overdraft facilities like banks do.
2. Credit score impact: Your credit score could go down if you don’t pay back the loan on time.
3. Additional charges: Some NBFCs may charge extra fees, such as processing fees, early payment penalties, and so on, which can make the loan more expensive.
4. Regulatory differences: NBFCs are not regulated the same way banks are, which could signify that customers are not always as safe with NBFCs.

Further reading: Debt management: Advanced strategies for paying off debt quickly 

How to choose the best NBFC for a personal loan?

Not every NBFC is the same. There may be some that have better services, rates, and terms than others. So, it’s a good idea to research and compare NBFCs before applying for a personal loan. If you need a personal loan from an NBFC, follow these guidelines to choose the right one:

• Ensure the NBFC is reputable and registered with the RBI. Check online for customer reviews, ratings, and comments.
• Research about the fees, rates, and charges of various NBFCs. Use online tools to calculate total loan costs, including interest, processing fees, and early payoff penalties. Negotiate with the NBFC for a better deal.
• Find out what the loan amounts, terms, and requirements are for each NBFC. Consider your needs, repayment capacity, and eligibility before making a decision. Also, consider the required paperwork and processing time.
• Evaluate the customer service of various NBFCs. Look for quick, friendly service and easy loan management through online access, mobile apps, and digital tools.

These tips will help you find the best NBFC for a personal loan that fits your needs and demands. Remember that a personal loan is a big commitment, so be smart about what you choose and borrow responsibly.

Here is a list of a few of the NBFCs operating in India currently:

Also read: The best banks in India: Leading the way in finance

Bottomline

So, there you have it! The world of NBFC personal loans is not just about easy access to finance. Despite your credit score, it’s important to find a financial partner who understands your needs. Yes, an NBFC personal loan for a low CIBIL score could be your financial lifeline, helping you navigate through your credit journey with ease. 

The choice you make with your money is a step closer to your goals, so keep that in mind. So, choose wisely, borrow responsibly, and let your NBFC personal loan pave the way to your financial freedom.