Why do individuals, firms and businesses choose to borrow money from lenders? This is all because we need the money for all the situations. Lenders ask for certain guarantees while lending money to individuals, but trust is the only thing that matters in some cases.
Any loan is made up of 3 main components: the principal of the loan amount, the interest rate, and the payback period. NBFCs and banks prove to be the most reliable lenders as they are dependable and are bound by certain government policies.
Today, give many NBFCs give out Personal Loans, but it is important to learn the intricacies of such loans before choosing one.
Till a couple of decades ago, banks and individual moneylenderswere all you had when you wanted a loan. Things have changed significantly with the entry of NBFCs.As a borrower, you might be confused as to which type of financial institution is best for you to apply for a personal loan. Should one take a personal loan from a private bank or a public sector bank? What about NBFCs? What about a fintech?
What is a bank?
The banking industry leads the way in finance, including cash and loans. Banks are the institutional structures that take deposits and issue loans to individuals, they play an important role in the financial condition of the state. In India, the Reserve Bank of India (RBI) is theIndian banking regulator.
What is NBFC?
A Non-Banking Financial Company (NBFC) is not a bank, but it performs a monetary function like banks such as providing loans, credit facilities, investments, other schemes, and so on. NBFCs also provide services to businesses such as the acquisition of shares, stocks, debentures, bonds, and securities issued by the government.
It also enables the services such as hire purchase, leasing, venture capital financing, housing financing and insurance.
Benefits of NBFCs
As a borrower, you have several benefits of taking a personal loan from an NBFC as compared to a bank.
Choose what is right for you:
Both NBFCs and banks offer personal loans. While banks are known for their low-interest rates, NBFCs are rapidly reforming by offering competitive rates to individuals. If you need funds quickly and without any difficulty, NBFCs are a good solution.
Every person's needs and requirements are different. Some prefer faster loan approval, and some prefer larger loan amounts, while some prefer good customer service. You must choose a lender and product based on your requirements.
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