At the time of urgent financial need, everyone looks for the places or people that can give them money. It includes family, friends, your Employer and also loan providers. Banks and NBFCs both provides loan, but it’s important to understand that which one is better to get a loan.
A person can take loan from Bank or NBFC, but there are few differences between Bank Loans and NBFC Loans. Brief knowledge about these differences can help you to select the better option for your loan.
Banks and NBFCs both are the financial entities and offers similar financial products. Because they offer same products and services, it’s quite tough for a Loan applicant to select the better one and they always think about which one would be best for their need, Bank or NBFC. Banknomics India did a brief comparison between the services and products of Banks and NBFCs and trying to provide a complete description about their facilities. This will help a borrower to find out the best option while looking for a loan.
Key differences between Banks and NBFCs
Banks and Non Banking Financial companies in India both offer loans, credit cards, Insurances and other financial products and services. Banks in India comes under the act of banking companies operated by the RBI while the Non Banking Financial Companies comes under the Companies Act of 1956.
NBFC never issue cheques or drafts and they also not accept the deposits. Every bank and NBFC has their term and condition and they follow it with their financial products and services. While we talk about banks, they allow their account holders to transact money. Banks have authority to be a part of payment as well as the account settlement of their customers.
Best choice to approach a loan
To choose a bank or NBFC for a loan, it’s also important to keep it in your mind that which kind of loan you are looking for. Many NBFCs offer fast loan approval with easy repayment options for their loan applicants. As compare to the NBFCs, Banks have a variety of loan products such as Home Loan, Personal loan, car loan, Business Loan, Education loan and so many other products.
A loan applicant can get the best option for their loan on the basis of following criteria’s:
- Credit History or CIBIL Score
- Interest Rate
- Loan Eligibility Criteria
- Inflexible Process of Documentation or Paperwork
Credit History or CIBIL score: