Why is Taking a Personal Loan from an NBFC a Better Choice?

  • Updated on: 27 Sep 2023
  • Published on: 10 May 2023
Why is Taking a Personal Loan from an NBFC a Better Choice?

NBFCs are non-banking financial companies that can offer credit and investment options. NBFCs are known to be more technology-focused as compared to traditional banks. An instant personal loan by NBFC is usually easier and faster to avail. However, the NBFC personal loan interest rate may sometimes be higher than that offered by a bank.

Read on to know why getting a loan from an NBFC is considered more convenient.

Features and benefits of a personal loan by NBFC

Loan amounts and security required

NBFCs have a wider range when it comes to the available loan amount you can apply for. These loans usually start at just ₹5,000 and go up to ₹40 lacs. The best part is that these amounts are available without any need of attaching your assets as security. This is usually not the case with traditional banks, which need collateral when the loan amount crosses ₹20 lacs.

Easy-to-meet qualifying criteria

To apply for a loan, you first need to meet the eligibility terms of the financial institution. NBFCs usually have simpler criteria that you need to meet as compared to banks. They may also have alternative credit scoring mechanisms instead of relying on credit scores to approve your loan application.

This makes it easier for new-to-credit customers to get a loan from an NBFC as opposed to banks that may require a score of 750 or more for an unsecured loan. This is also why you may see an NBFC personal loan for bad credit being advertised.

Simple application procedures

Since NBFCs are generally digital-first lenders, applying for a loan is easier. You can do so on their app or website in minutes. This ease of application may not be available when you apply with traditional lenders. When you need funds urgently, an NBFC’s easy application process makes the experience user-friendly. You can also get customer support at the touch of a button from NBFCs.

Minimal paperwork

Since NBFCs have simpler eligibility terms, their requirement for documents is also reduced. You can apply for a loan just by uploading 2-3 documents, which include your bank statements and KYC documents. This is not the usual case with traditional banks.

Faster approval and disbursal

Using AI and ML processes in the approval stage, NBFCs are also able to approve applications much faster. For instance, you can get approval in 10 minutes with Fibe, which partners with NBFC, and this speed also translates to getting the money in your account. Where traditional lenders may take 2 to 4 days, NBFCs may disburse the money on the same day if your application is approved and all documents are verified.

NBFC personal loan interest rate and other charges

While most banks are transparent about all fees and charges, make sure you apply for a loan with an NBFC which has no hidden charges. These financial companies generally have prepayment charges and the NBFC personal loan interest rate may be either the same or higher as compared to banks. By comparing various NBFCs and their rates, you can opt for the most affordable one.

Flexible repayment options

Like banks, NBFCs also offer flexibility in tenures. You can choose tenures from 3 months to 5 years from an NBFC and repay as per your financial capability.

Fibe being a digital lending platform can help you in applying for a loan of up to ₹5 lakhs online and repay at 0 prepayment charges anytime.

To avail of a loan, download our Personal Loan App and apply online to meet any shortfalls without collateral or restriction.

FAQs on NBFC personal loans

What are the advantages of taking a loan from an NBFC?

Usually, NBFCs are faster at approving loan applications, offer digital convenience and have relaxed eligibility criteria. This makes availing of a loan from an NBFC easier and more convenient.

Why do people prefer NBFCs over banks?

Customers often prefer NBFCs over traditional banks due to better customer service, 24X7 online loan processes and minimal paperwork. NBFCs are also quicker to disburse the loan amount, which is useful in emergencies.

How much loan can I get from NBFC?

The loan amount depends on the NBFC and your eligibility. Usually, you can get up to ₹40 lacs in unsecured credit from an NBFC.

Is it safe to take a loan from NBFC?

Yes, NBFCs that are loan companies need to register with the RBI and are safe to borrow from. You can also check the credit rating of NBFCs in India.

Which is better NBFC or bank?

While both have their own pros and cons, banks may charge a lower interest rate but have more formalities that you may have to go through. NBFCs are known to have better customer service and easy processes that are quick to complete.


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