{"id":6960,"date":"2022-08-04T16:12:34","date_gmt":"2022-08-04T10:42:34","guid":{"rendered":"https:\/\/blog.ruloans.com\/?p=6960"},"modified":"2022-08-04T16:12:34","modified_gmt":"2022-08-04T10:42:34","slug":"nbfc-personal-loan-vs-bank-personal-loan-whats-the-better-choice","status":"publish","type":"post","link":"https:\/\/www.ruloans.com\/blog\/nbfc-personal-loan-vs-bank-personal-loan-whats-the-better-choice\/","title":{"rendered":"NBFC Personal Loan vs Bank Personal Loan: What\u2019s The Better Choice?"},"content":{"rendered":"\n<p>A <a href=\"https:\/\/www.ruloans.com\/personal-loan.htm\">personal loan<\/a> can often be the best available solution for you to meet specific financial needs. It is easily available, and lenders do not levy restrictions on how you spend the borrowed amount. A range of financial institutions offer personal loans today, so it is crucial that you reach out to those that serve your needs best.<\/p>\n\n\n\n<p>The two most trusted platforms to seek personal loans from are banks and Non-Banking Financial Companies (NBFCs). While banks have long been the traditional institution for borrowing money, an NBFC loan comes with its share of advantages.<\/p>\n\n\n\n<p>However, what exactly is the difference between the two?<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.ruloans.com\/blog\/nbfc-personal-loan-vs-bank-personal-loan-whats-the-better-choice\/#Banks_Vs_NBFCs\" >Banks Vs NBFCs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.ruloans.com\/blog\/nbfc-personal-loan-vs-bank-personal-loan-whats-the-better-choice\/#1_Loan_Policies_Restrictions\" >1)&nbsp; Loan Policies &amp; Restrictions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.ruloans.com\/blog\/nbfc-personal-loan-vs-bank-personal-loan-whats-the-better-choice\/#2_Loan_Amount\" >2)&nbsp; Loan Amount<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.ruloans.com\/blog\/nbfc-personal-loan-vs-bank-personal-loan-whats-the-better-choice\/#3_Interest_Rate\" >3)&nbsp; Interest Rate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.ruloans.com\/blog\/nbfc-personal-loan-vs-bank-personal-loan-whats-the-better-choice\/#4_Processing_Time\" >4)&nbsp; Processing Time<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.ruloans.com\/blog\/nbfc-personal-loan-vs-bank-personal-loan-whats-the-better-choice\/#5_Additional_Fees\" >5)&nbsp; Additional Fees<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.ruloans.com\/blog\/nbfc-personal-loan-vs-bank-personal-loan-whats-the-better-choice\/#A_Decision_That_Could_Impact_You_For_Decades\" >A Decision That Could Impact You For Decades<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Banks_Vs_NBFCs\"><\/span><a><\/a><strong>Banks Vs NBFCs<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A few decades ago, banks stood as the only financial institutions that offered personal loans. However, changes in regulations and encouragement of alternatives have helped NBFCs emerge as a popular choice when it comes to borrowing sums.<\/p>\n\n\n\n<p>All banks in India are governed by the apex bank of the country, the Reserve Bank of India. Therefore, their complete operations fall under this institution and its structure. An NBFC offers similar functions to banks, such as providing credit facilities, investments, and loans. While they too are registered with the RBI, they benefit from far more lenient policies.<\/p>\n\n\n\n<p>Each institution comes with its advantages and disadvantages when it comes to offering personal loans. Here\u2019s a quick look at the significant factors that differ when it comes to borrowing money from&nbsp; NBFCs as compared to banks.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Loan_Policies_Restrictions\"><\/span><a><\/a><strong>1)&nbsp; <\/strong><strong>Loan Policies &amp; Restrictions<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Typically, banks have more stringent loan policies than NBFCs. They demand high credit rates, along with a particular degree of income for people to be eligible for personal loans.<\/p>\n\n\n\n<p>The personal loan NBFCs offer is subject to far fewer restrictions. The minimum income criteria is lower, as is the credit score required. Therefore, several people who may otherwise be rejected by banks approach NBFCs directly for loans.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Loan_Amount\"><\/span><a><\/a><strong>2)&nbsp; <\/strong><strong>Loan Amount<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Both banks and NBFCs will have restrictions on the amount you can borrow. Usually, if the sum is higher, banks will sanction a percentage of it, with the borrower having to put together the remaining amount. NBFCs have a higher probability of providing you with the entire amount when it comes to larger requirements.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Interest_Rate\"><\/span><a><\/a><strong>3)&nbsp; <\/strong><strong>Interest Rate<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The most significant factor to consider while applying for a loan is the interest rate you will be charged, as it will dictate your upcoming EMIs. The interest rates offered by banks and NBFCs on personal loans vary widely. While the RBI plays some role in dictating the lending rates for banks, these rates are determined completely independently by NBFCs.<\/p>\n\n\n\n<p>In most cases, public and private banks offer a lower personal loan interest rate than NBFCs. This percentage is not a standard figure that applies to all approved applicants, but rather a range that will be dictated by your credit score, employment status, age, and other factors.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_Processing_Time\"><\/span><a><\/a><strong>4)&nbsp; <\/strong><strong>Processing Time<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Your reason for seeking a personal loan might be to address an immediate financial emergency. In such a situation, quick dispersal of the amount borrowed is essential.<\/p>\n\n\n\n<p>Banks can require extensive paperwork before they assess and approve your loans. Credit checks themselves can take several days. In comparison, the lower restrictions of NBFCs mean that they are far quicker in allocating money.<\/p>\n\n\n\n<p>If you are in a rush, NBFCs might be the smart choice for you as they offer much quicker loan processing times. Certain NBFCs also disperse amounts within 24 hours of applying. Furthermore, the personal loan non-banking finance companies provide does not require collaterals or guarantors, even with higher sums.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"5_Additional_Fees\"><\/span><a><\/a><strong>5)&nbsp; <\/strong><strong>Additional Fees<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Apart from the amount borrowed and interest charged, additional charges can determine the final sum you owe. Every loan application involves processing fees, which differ between private lenders and banks. There may also be pre-payment charges involved.<\/p>\n\n\n\n<p>Before making any choice, make sure you know the processing fee involved, as well as any additional charges that the lender may apply.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_Decision_That_Could_Impact_You_For_Decades\"><\/span><a><\/a><strong>A Decision That Could Impact You For Decades<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Paying back personal loans can take years and will be a commitment that shall affect you every single month. Before you make a decision, ensure that you have compared the pros and cons of the offerings made by NBFCs and public and private banks. While there is no clear winner, your choice will be dictated by your credit history, the market conditions, and the urgency of the loan. Whatever decision you make, <a href=\"https:\/\/www.ruloans.com\/\">Ruloans<\/a> is here to aid you in your journey.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A personal loan can often be the best available solution  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href=\"https:\/\/www.ruloans.com\/blog\/personal-loan\/\" rel=\"category tag\">Personal Loan<\/a>","rttpg_excerpt":"A personal loan can often be the best available solution 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