NBFCs are your go-to option when you need urgent cash to fulfill a myriad of needs. This is particularly true when you are looking for a loan with a not-so-good credit score.
NBFCs came into existence in the 1960s in India and soon became a great alternative for individuals and businesses whose needs could not be fulfilled by the existing banking system. There are different types of loans offered by NBFCs.
Before we get down to the types of NBFC loans, let’s quickly glance through the benefits of choosing an NBFC for a loan.
Advantages of choosing NBFCs for a loan
1. Quick processing
NBFCs are known for faster loan processing as compared to banks. The majority of banks have to conform to the legal procedures and guidelines rolled out by the RBI. Banks disburse loans after assessing a plethora of factors such as documentation, eligibility, and creditworthiness which may take as many as 2 weeks to get the money into your account. NBFCs are way faster than banks in terms of loan processing, and you can expect funds in your account in a matter of a few minutes or days.
2. Loans for people with bad credit
If you have bad credit score and need a loan, you must get in touch with an NBFC. NBFCs offer loans even to those who do not have an impressive credit history which is why they can cater to a vast consumer base.
3. Chance to improve your CIBIL score
Whether you are looking for a business loan or a personal loan, you can reach out to an NBFC. Timely repayment of the loan is also an opportunity for you to improve your credit score.
4. Excellent customer service
Excellent customer service is another major reason why NBFCs have become sought-after for loans. From document verification to loan processing, and quick disbursal, every step is taken care of in a timely manner.
Types of loans offered by non-financial banking companies
NBFCs offer a plethora of loans to consumers in a hassle-free manner. Let’s quickly glance through a few of them.
1. Personal loan
NBFC personal loans are quite popular in the Indian market. One can apply for NBFC personal loan online, and since the eligibility criteria are less stringent as compared to the traditional lending channels, you can expect it to be disbursed almost instantly. If you are looking for an NBFC personal loan for bad credit, you can apply for it from the comfort of your home. All you need is to furnish all the documents needed by the NBFC, and you are good to go.
2. Home loan
If you are looking to buy your dream home and looking for a home loan, you can either approach a bank or an NBFC. NBFCs or non-banking financial companies offer home loans with flexible tenures, which may be between 20 to 25 years.
The interest rates are decided by the NBFCs themselves, as RBI doesn’t have any interference in it. Home loans are given from their own capital, and the interest rates are influenced by the market rates.
3. Education loan
NBFCs offer education, both secured and unsecured loans, to students looking to pursue studies abroad. A secured loan is offered against a property or security. On the other hand, an unsecured loan is offered by the lender without any collateral or security. Secured loans are ideal for those looking for lower interest rates and higher borrowings. This type of loan also permits longer repayment periods.
Unsecured loans, on the other hand, are ideal for students with a steady flow of income. Your assets are also secure in case things go haywire; however, interest rates for such loans tend to be higher due to a higher risk proposition for lenders.
4. Car loan
Like all other loans, car loans are provided by both banks and NBFCs. NBFCs also offer these loans at competitive rates. Sundaram Finance, L&T, Au Financiers, & Mahindra Finance are some of the leading NBFCs operational in India.
5. Gold loan
The demand for gold loans has seen an upsurge in recent years. There are a plethora of reasons behind availing of gold loans, such as loss of employment, emergency, and easily accessible capital, to name a few. The majority of NBFCs offer gold loans, and it is pretty easy to get this loan because it doesn’t require any income proof.
The Bottom Line
NBFCs have certainly transformed the lending space in India. Owing to a myriad of loan offerings, they have positioned themselves as a great alternative to traditional lending channels. From education loans to home loans, car loans, and gold loans, there are a variety of loans offered by NBFCs in India.
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