Since 2015, Non-BankingFinancial Companies (NBFCs) have been contributing heavily towards credit growth, in the lending industry. In fact, according to data from CRISIL, the AUM of NBFCs is set to grow 8-10% in FY23 against 6-8% in FY22 and just 2% in FY21.
As NBFCs continue to expand their turf, you may want to understand whether to choose a bank or NBFC, when it comes to choosing a home loan for your requirements. Here’s a comparison of different parameters to help you make the right choice.
1. Interest rates
The interest rates offered by banks are linked to the Marginal Cost of funds-basedLending Rate (MCLR). It simply means that the interest rates offered by banks are linked to an external benchmark and banks must respond to the changes in MCLR by increasing or decreasing their interest rates. On the other hand, NBFCs do not fall under the purview of RBI. NBFCs follow Prime Lending Rate (PLR) to decide the interest rate.
However, if you have a strong credit history and credit score, you can negotiate with the lender to get a home loan at a lower interest rate. Home loan is usually taken for a longer duration and can stretch up to tenures of 25 to 30 years. Thus, even as banks may offer lower home loan interest rates as compared to NBFCs, it is best to consider other factors before making the final choice.
NBFCs have a strong focus on convenience and have a more comfortable customer experience. On the other hand, dealing with banks could be a hassle, especially for busy professionals and businessmen who are short on time.
NBFCs score high on convenience. For instance, Poonawalla Housing Finance offers competitive home loan interest rates with doorstep service, quick processing time, and simple eligibility criteria. These factors simplify your overall lending experience and help you fulfill your housing finance needs without any hassle.
3. Stringent eligibility
Banks have more stringent eligibility criteria and consider several more factors before granting a home loan, as compared to NBFCs. Thus, a home loan from a bank can be taken only if all the papers are in order and the house is in an established and recognized location.
For instance, a low credit score and/or a few issues with your home location may not get you a loan with a bank. However, you can get a loan from an NBFC at a slightly higher interest rate.
4. Relaxed policies
NBFCs have relaxed policies, as compared to banks. It does not only come in handy at the time of taking loan approvals but also during the long loan tenure. For instance, you can skip the lengthy paperwork when it comes to dealing with NBFCs.
Many NBFCs, including Poonawalla Housing Finance, allow you to submit online loan applications and provide end-to-end doorstep service. It is convenient to deal with NBFCs, as compared to banks when it comes to home loans.
5. Processing time
The processing time taken by banks for approving and disbursing the home loan is longer as compared to NBFCs. With NBFCs, you can get a sanction within 72 hours from your online application as compared to banks,where this can take up to a few weeks.
If you have already shortlisted your dream home, you do not want to be waiting for weeks and months to get the sanction and loan disbursed from the bank. Hence, it is better to connect with an NBFC like Poonawalla Housing Finance that helps you fund your housing finance needs in the least possible time.
Hence, it is best to choose an NBFC like Poonawalla Housing Finance if you’re looking to enhance your lending experience. Make most of lower interest rates, easy home loan application processes, and the convenience of quick approvals and disbursals.