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By Rupeezo | 6th, Mar, 2023
When we think of availing a personal loan, banks and NBFCs are the only options that come to mind.
Personal loans are extensively utilized in financial products, as it helps meet different financial needs. When stuck with a medical emergency or in need of funds for home renovation, an instant personal loan online is the go-to choose.
Borrowing a loan from both banks and NBFCs has its own set of merits and demerits.
To find out which one of these two is the option for you, getting familiar with the benefits or drawbacks of exercising such options will be helpful. So, let’s compare both the bank and non-bank options.
Banks are the most commonly approached source for a personal loan apply. They provide a broad range of loans including personal loans, both secured to unsecured loans. Secured personal loans are given against collateral such as a car or a house, while unsecured loans do not require pledging collateral.
Banks may offer lower interest rates for personal loans. But one has to undergo an extensive verification and approval process to get a personal loan.
Lower Interest Rates: One of the main benefits of bank personal loans is that they provide lower interest rates as compared to other financial institutions or lenders. Banks adhere to strict requirements before giving personal loans online and only offer loans to low-risk borrowers, which may lead to a low-interest rate. But not all banks offer low interest on personal loans.
Flexible Repayment Options: Banks offer different loan terms or tenures to choose from depending on your requirements or financial situation. You can get flexible repayment options for personal loans, including fixed and variable interest rates.
Credible Institution: Banks are among the reliable source of financing or for a personal loan apply online as they have been around for a very long time. This is important from a borrower's perspective if you wish to form a long-term association with the lender.
Stringent Approval: The major hindrance to get a personal loan from a bank tough is their strict approval process. Obtaining a personal loan from the bank is particularly difficult for people with a low credit score or high debt-to-income ratio.
Long-drawn Process: Banks have a lengthy approval process for personal loans apply online, and it may take several weeks before you can get approval for your loan. This is not favourable in conditions where there is an urgent for a personal loan.
Non-Bank Personal Loans
Personal loan without bank non-bank lenders is financial institutions that also provide various types of loans. They offer personal loans, home loans, education loans, vehicle loans, business loans, travel loans, payday loans, etc. Non-bank lenders offer more flexibility as they are comparatively lenient in their loan requirements. They are a faster option to avail of a loan as they provide a swift process along with a quick disbursal of the loan. Borrowers who do not qualify for a loan from banks prefer these options.
What Are the Advantages of Obtaining a Personal Loan from Non-bank Options?
Fast Approval: When compared to banks, non-bank lenders typically offer an instant personal loan online and loan disbursal times. Some lenders can approve a loan application in a matter of hours, and you can get access to funds within a single business day.
Less-Stringent Process: Non-bank lenders are often more lenient when it comes to approval requirements. If you are worried about your credit scores and do not want to go through strict processes, then non-bank options are ideal for you.
Online Procedure: Most of the NBFCs and non-bank lenders offer a personal loan online following an online application process. This makes availing of a personal loan more convenient and a time-efficient process as you don’t have to physically visit the lender.
Apply for an instant personal loan approval here.
Higher Interest Rates: Non-bank lenders may charge higher interest rates as compared to banks. NBFCs take more risk since they follow less stringent rules for qualifying an individual for a loan. This puts them at a risk, and they ask for a higher interest rate as a result. But this may not be the case with every lender, since many lenders offer personal loans at considerable interest rates.
Shorter Repayment Terms: Non-bank lenders generally offer shorter repayment terms, which can be both an advantage and disadvantage depending on your financial requirements. Some lenders require you to pay higher monthly payments since you have to repay the loan in a short time. However, this does not apply to all lenders, as some lenders offer personal loans apply with a longer tenure.
Less Regulated: Although lenders that offer a personal loan without bank are recognized and approved by RBI, they are not as strict as banks. That does not mean that they are not honest in their lending practices, but you have to be vigilant about the due diligence of the lender before you apply for a personal loan.
It’s hard to consider anyone's options between the bank and non-bank ideal, since the answer may not fit each individual’s financial situation or preference.
If you have a good credit score, a stable income, and a low debt-to-income ratio, a bank personal loan may be the option for you.
Banks provide low-interest rates, longer repayment tenure, and flexible repayment options. But this may not be true for every bank, therefore, you have to weigh the different options available and then make a choice between the bank or non-bank option.
On the other side, if you have a decent credit score, or are in urgent need of funds, then non-bank lenders are the best option for you. Non-bank options have quick approval times, and a lenient approval process, which can make taking personal loans online a swift and seamless process.
Some research on your part is needed in order to compare the rates of the different lenders or financing options, and then find the one that suits your loan needs.
In the end, it’s up to the borrowers to evaluate their financial condition and eligibility requirement before they go for a bank or non-bank option.
If you seek instant personal loan approval, check out the services of Rupeezo.
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A travel loan is a type of personal loan that is granted to individuals to cover
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