NBFCs offer many more advantages than banks when it comes to loans and customer service. We list some of the advantages.
Whether one wishes it or not, there comes a time when one requires money in a hurry. While an ideal situation is one in which a person may have enough money saved away to meet any eventuality, the reality is often the opposite. Whether for a down payment on a dream house or money needed to expand one’s business operations, there is no gainsaying the fact that raising funds urgently can be a tough task.
In such cases, people often turn to their banks for personal or property loans. But a rising number of people are approaching NBFCs (Non-Banking Financial Companies) for loans. Banks have traditionally been the source of loans for most Indians, and NBFCs are a relatively new source of funding. They differ from banks in the sense that they cannot issue cheques drawn on themselves as they are not a part of the payment and settlement chains like banks.
Financial experts often advise their clients to borrow NBFC loans instead of traditional bank loans. There are many advantages of taking loans from NBFCs. We outline a few of them:
* Similar rates of interest to banks: Earlier, the rate of interest charged on NBFC loans was higher than that of bank loans. This was a major reason for people to steer clear of the former. However, NBFCs solved this issue by borrowing from the debt markets. Today, most NBFCs offer low, if not lower than banks’, rates of interest on loans.
* They support property purchases: Indian NBFCs are well clued in to the wishes of the average consumer – and they realise that property purchases are important dreams for many Indians. They offer flexible loans to facilitate property purchase and have extremely friendly policies for first time loan borrowers as well.
* They fund private education: It is the dream of many an Indian parent to give their child higher education in a foreign university. They can easily avail of NBFC loans for children’s education. Indian NBFCs reward meritorious students and their parents with a host of education loan products that facilitate admission and stay abroad, among other things.
* They provide higher loan amounts: A major draw for many people who consider NBFC loans is the fact that they provide higher loan amount than banks. They take such factors into consideration as stamp duty and registration that the loan applicant will pay, when evaluating the property cost. All of these expenses are added to the property value before the loan amount is decided upon. Banks grant loans based on the cost of the property alone.
* Quicker turnaround time:
NBFCs show a greater propensity for faster processing of the loan request than banks. They take lesser time to process the paperwork, scrutinise documents, evaluate the property and disburse the loan amount. This is useful for those looking for quick liquidity