In the fiscal year 2018-19, NBFCs across India disbursed a total of around 69,517 personal loans. Typically, a high loan value, lucrative terms of service and customisation facility offered by NBFCs work in favour of individuals while applying for credits. Regardless, to maximise the utility of the accompanying features, individuals need to weigh in the pros and cons of availing a loan from a non-banking financial institution.
It will not only help to make an informed decision but also allow borrowers to understand how to streamline the entire process of availing an NBFC personal loan.
Advantages of availing personal credit from NBFCs
These following pointers highlight the perks that borrowers can enjoy when availing credits from a non-banking institution.
- Simple eligibility criteria
NBFCs are not very stringent when it comes to personal loan eligibility criteria. In fact, individuals with low CIBIL score may also be able to secure required financial assistance from an NBFC against specific terms of service. Nonetheless, applicants with a robust score of above 750 are more likely to fetch better terms and rates of interest.
Mostly, individuals are required to follow these simple criteria to avail a personal loan from an NBFC –
- Applicants should be residing in India.
- They should be between the age of 23 years and 55 years.
- Must have a stable job with a minimum monthly income as specified by the NBFC.
However, NBFCs may ask applicants to meet additional specifications if they have a low CIBIL score.
- Hassle-free documentation process
Usually, existing customers do not need to submit additional documents when applying for an NBFC personal loan. The documentation process to be followed by the new borrowers is also quite simple and can be completed quickly. Generally, NBFCs ask applicants to submit documents that serve as proof of –
- Income
- Identity
- Address
- Employment
Regardless, to complete the verification process more thoroughly, NBFCs may ask for additional documents while applying for a personal loan.
- Online application process
Most leading financial institutions like Bajaj Finserv follow a completely paperless and online application process. Individuals can apply for a personal loan online quickly by visiting the financier’s official website and filling the application process by clicking on the ‘Apply Now’ button.
The NBFC also extends pre-approved offers to customers and further makes the process of availing a loan simple and hassle-free. Typically, such lucrative offers apply to financial products like personal loans, business loans, etc. Check your pre-approved offer by entering your name and contact number.
- Quick loan approval
In most cases, NBFCs follow a quick loan approval process and tend to disburse the sanctioned amount typically within a day or two. It comes in handy for borrowers who are in need of funds and intend to meet their requirements smoothly. Experts also recommend individuals to be aware of the factors that affect personal loan approval so that they can streamline the same accordingly.
- Competitive interest rate
Leading NBFCs extend personal credit at an attractive rate of interest on personal loans and are quite transparent when it comes to additional fees. It helps borrowers make an informed decision and further allows them to streamline repayment. One can use a personal loan calculator to further analyse the impact of the rate of interest levied by NBFCs on the loan amount.
Disadvantages of availing a personal loan from NBFCs
Here are some of the most prominent disadvantages of availing a loan from an NBFC –
- High interest rates
Usually, the cost of availing an NBFC personal loan is quite expensive. Nonetheless, it is mostly due to the risk level that accompanies high loan amounts. Also, the fact some NBFCs are lenient with applicants possessing low CIBIL score pushes the loan interest rates higher.
Individuals must thus factor in both the perks and drawbacks of NBFC personal loans before applying for it. They should also choose a financier who extends practical repayment terms for smooth processing.
