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Banks and NBFCs offer personal loans, but there are certain differences between the terms they offer.
A sound financial situation does not guarantee immunity against emergencies. You could need money any time to cover medical bills, university fees, or any other expense. Fortunately, you can avail of a personal loan within hours and meet these needs without using your savings. You can take a personal loan from banks or Non-Banking Financial Companies (NBFCs), although the choice isn’t as straightforward as it may look.
What is a personal loan?
A personal loan is an unsecured loan offered by lenders. You can use a personal loan to meet a range of expenses such as debt consolidation, home renovation, and overseas travel. The interest charged on personal loans is often less than the interest on credit cards, making them a alluring product.
NBFCs vs banks for personal loans: how do you choose?
The choice between banks and NBFCs for personal loans depends on you. Following the below pointers will help you make a better decision.
1. Compare different offers
Different lenders charge different personal loan interest rate . If you are in the market for a personal loan, compare lenders, including banks and NBFCs, before making a final decision. But at the same time, you should not apply at multiple places as frequent credit enquiries may hamper your credit score.
NBFCs are more lenient in approving personal loan applications, but they charge higher interest than banks.
2. Do not settle for high interest
NBFCs or banks may offer loans with higher interest if you have a low credit score or an unhealthy repayment history. These loans may come with a higher processing charge as well. It is advisable to wait till your credit score improves instead of availing of high interest loans. However, if you need the loan urgently, compare different offers to choose one that offers the lowest interest rate.
3. Choose a leading institution
Taking a personal loan from a trusted bank or NBFC can help you avoid hidden charges. Top lenders such as IDFC FIRST Bank have a transparent process, so you do not have to pay anything extra to secure a personal loan. IDFC FIRST Bank’s personal loans also come with affordable interest rates, so you can save money as well.
That said, the bank will approve your application only after considering factors such as your credit score and credit repayment history.
Personal loans are often needed during emergencies, prompting you to accept the first offer you get. But you must exercise restraint and take time before taking out a personal loan from a bank or NBFC.
Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.
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