Bank VS NBFC Companies | Who offers the cheapest gold loan?

 

What are NBFCs?

Non-bank financial companies (NBFC), also known as non-bank financial institutions (NBFI), are companies that offer certain types of banking and financial services but do not have banking licenses.

The NBFC is subject to regulation and oversight by the central and state governments.

Investment banks, loan lenders, stock market lenders, insurance companies, hedge funds, private limited companies, and P2P lenders are all examples of NBFC.

The NBFC has increased in volume and played an important role in meeting the demand for loans that traditional banks have not met.

What are the Advantages of obtaining a loan from NBFC?

●      Fast processing - Banks usually take a lot of time to process loans. However, this is not the case with NBFC. In fact, non-bank financial companies process loans faster than banks.

●      Minimum paperwork - NBFC needs less paperwork for borrowing loans as compared to banks. This also means that your loan request will likely be accepted fastly.

●      Less stringent process -Banks are very strict while processing a loan. NBFC, on the other hand, has a less stringent process when it comes to approving loans.

●      Fast repayments - NBFCs transfer loans very fast in your account as compared to banks. You don't have to wait for months to get the approval.

●      Competitive interest rate - Due to intense competition in the loaning sector, the NBFC has kept interest rates low. These lower interest rates reduce the spread of EMI costs. In many cases, the interest rate offered by the NBFC is lower than the interest rate offered by the bank.

●      Charges- maximum NBFCs do not charge any processing fee and penalty charges but few banks charge about 1% prepayment charges.

●      Accessible to individuals with low creditworthiness - Banks only provide loans to individuals who have a seamless and good credit rating.

However, NBFC is open to the idea of lending money to customers who do not have an excellent credit rating. However, it must be noted that interest rates would be higher for individuals with a low credit rating.

Why take loans from NBFCs?

Loans offered by the NBFC are cash-strapped, simple, and require a few documents.

They have an easy repayment option and do not charge any fees for processing or penalties, even though the rate is higher than a bank loan. If you are unable to meet the eligibility criteria with a statement issued by the bank you may be able to obtain funding from NBFCS.

For getting a gold loan, always do your regular research, evaluate your repayment methods and understand the conditions before taking the loan. It may be easy to get a loan from the NBFC, but it can be an economic problem if interest rates limit your ability to repay.