Personal loans are a great tool to fund any financial need, including a wedding in the family, a trip abroad, urgent medical expenses, debt consolidation, home renovation and repairs, and so on.
These loans are offered by almost all banks and non-banking financial companies (NBFCs) in India. That is why when you want to apply for a personal loan online or offline, choosing the best lender can be a difficult task.
Here we will discuss how NBFC personal loans are different from bank personal loans and which one to choose.
What is Bank?
Banks are organised financial institutions and are governed by the apex bank of the nation, i.e. the Reserve Bank of India (RBI).
What is NBFC?
A Non-Banking Financial Company or NBFC is not a bank. However, it runs financial functions similar to banks, like providing loans and credit facilities, investments, insurance plans, and so on.
Why Opt for NBFC Personal Loan?
NBFCs have been exceptional in the unsecured loans (including personal loans) market due to their customized offers, broader reach, co-lending agreements, robust risk management and a dynamic digital presence. NBFC personal loans come at attractive interest rates of 10.99% to 36% p.a. You can get the loan
amount of minimum Rs. 50,000 to maximum Rs. 50 Lakhs from NBFC in India
and make the repayment in equated monthly instalments (EMIs) in flexible tenure
of 10 months to 7 years.
NBFC personal loans offer the following benefits to the borrowers over traditional banks:
Top 5 NBFC personal loans in India
|NBFC Name||Rate of Interest||Loan Amount|
|Tata Capital||Starting at 10.99%||Rs. 75,000 to Rs. 25 Lakhs|
|Bajaj Finserv||Starting at 13% p.a.||Up to Rs. 25 Lakhs|
|Aditya Birla Capital||Starting at 11% p.a.||Rs. 1 Lakh to Rs. 50 Lakhs|
|IIFL Finance||Starting at 16% p.a.||Up to Rs. 25 Lakhs|
|HDB Financial Services||17.25% to 36% p.a.||Up to Rs. 20 Lakhs|
Why Opt for Bank Personal Loan?
Due to their highly coordinated and regularized functioning, banks become more trustworthy. Also, the interest rates and processing fees charged by banks are often lower than that of NBFCs.
You can avail personal loan between Rs. 24,000 and Rs. 40 Lakhs from banks. The interest rates on bank personal loans vary between 8.45% to 31.50% p.a. and the repayment can be made within 1 year to 7 years tenure.
Bank personal loans offer the following benefits to the borrowers over NBFCs:
Top 5 bank personal loans in India
|Bank Name||Rate of Interest||Loan Amount|
|Punjab National Bank (PNB)||8.45% to 14.50% p.a.||Up to Rs. 10 Lakhs|
|State Bank of India (SBI)||9.60% to 15.65% p.a.||Rs. 24,000 - Rs. 20 lakhs|
|HDFC||10.50% to 21% p.a.||Rs. 50,000 to Rs. 40 Lakhs|
|ICICI||10.50% to 19% p.a.||Rs. 50,000 to Rs. 25 Lakhs|
|Axis Bank||12% to 21% p.a.||Rs. 50,000 to Rs. 15 Lakhs|
Both NBFCs and banks have their own sets of advantages for personal loan borrowers. While banks are recognised for their low interest rates and processing charges, NBFCs are improving rapidly by giving competitive rates to individuals. If you need funds quickly without much difficulty, NBFCs are a good option.
On the other hand, Banks are a reliable source of funding and offer more competitive rates to borrowers. Banks depositors can also avail the deposit insurance service provided by banks. So, if you want a safer option, you can choose banks. Also, if you have an existing relationship with a bank, getting a personal loan from that bank is more favourable and affordable.