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Middle class is growing at a fast pace and so are their needs and demands. They have better jobs and salaries. This class is improving their lifestyle drastically whether by buying a car or a house. But buying a car or a house needs a lot of investment. These investments are possible through a loan.

Now all of us know that a loan can be fetched from a bank. But then there is one other option, NBFCs. The difference between a bank and an NBFC:

•  A bank can accept a demand deposit but an NBFC cannot.

•  NBFC cannot issue a demand draught.

• The NBFCs can accept deposits for a minimum period of 1 year and a maximum period of 5 years. They cannot accept deposits which are repayable on demand.

• The deposits with NBFCs are not insured as with a bank.

Now, how to know whether to take a loan from a bank on an NBFC? Here we will sum up a few facts that will make it easy for you to decide whether to approach a bank on an NBFC.

It is easy to take a loan from NBFC

Fetching a loan from an NBFC is easier than a bank. Bank’s criteria to give a loan are strict compared to NBFCs. The minimum eligibility requirement for an NBFC is easy. So if you have a shady past when it comes to your finances then the person should approach an NBFC. The person will have a greater chance of getting a loan than a bank.

Banks offer lower rate of interest

The banks have more money at their disposal so they have lower interest rates compared to the NBFCs. These are competitive times and NBFCs too, offer lower rates. Though there is always a higher chance to get a lower rate from a bank. But then, the banks have more criteria to give a loan as told earlier. If you will go for a personal loan, you will get lower interest rates from the banks. You can compare the interest rates of HDFC personal loan, ICICI bank, Bajaj Finance, etc to get a clear picture.

Banks offer added advantages

Banks are really great at offering different deals to different segments of the society. Banks like HDFC offer lower interest rates to women. The first condition is the women should be a sole applicant or a first co-applicant. The second condition is that the women should be the sole owner or the co-owner of the property to be financed.

NBFCs have lower processing time

The processing time of a loan file can affect a person’s decision to apply for a loan. Some may need a faster approval for a loan. NBFCs have a lower processing time compared to banks, though it’s not a big difference. But then a day can be too long for a loan approval sometimes.

Loans make our lives easy but it is a burden too. The pressure to repay a loan is big so everyone would like to be safe. Choose wisely while applying for a loan as this will affect you for the times to come.

Choose carefully and keep it safe.

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