Finding out that your personal loan application has been rejected by a bank can be disheartening. However, it’s not the end of the road. Non-Banking Financial Companies (NBFCs) can be a lifesaver in such situations, offering you the financial assistance you need. NBFC personal loan provide a viable alternative with several unique benefits.
1. Why Banks Reject Loans
Banks are known for their stringent loan approval processes. You might have a good credit score and a stable income, but banks often have rigid criteria that can lead to rejection. Apart from your credit history, they analyze multiple factors like income stability and existing debts. Even a minor hiccup in your financial past can result in a denied application.
Banks also have specific risk management policies. They aim to minimize their risks, so if your profile doesn’t fit their ideal customer mold, you might face rejection. This cautious approach is beneficial for the bank, but it can be frustrating for you as a borrower.
Income-to-EMI Ratio
One critical aspect banks consider is your Income-to-EMI (Equated Monthly Instalment) ratio. This ratio compares your monthly income with your loan repayment obligations. Banks usually prefer this ratio to be below 55 to 60%. If your existing EMIs and the new loan’s EMI exceed this threshold, your application might get rejected.
Bank-Specific Criteria
Banks often have unique criteria that can be challenging to meet. For instance, they might require you to have a certain length of employment at your current job or a specific minimum income. Some banks even have age restrictions that can disqualify younger or older applicants. These specific requirements can be a major hurdle.
2. Exploring NBFC Personal Loan – How This Can Be a Solution For You?
If you’ve found traditional banks too rigid, it’s time to consider Non-Banking Financial Companies (NBFCs). NBFC personal loans offer numerous advantages that make them an appealing choice. Let’s explore how NBFC personal loans can be the perfect solution for your financial needs.
Leveraging NBFC Flexibility
One of the standout features of NBFC personal loan is their remarkable flexibility. Unlike banks, NBFCs cater to a diverse range of financial situations. Especially with cases of debt consolidation, NBFCs are more likely to understand your needs.
Banks often have a one-size-fits-all approach, but NBFCs tailor their services to fit your unique circumstances. They look beyond rigid criteria, making it easier for you to qualify for a loan. This flexibility means that even if your financial situation is a bit unconventional, you have a good chance of securing a loan from an NBFC.
Flexible Eligibility Criteria
Eligibility criteria can be a major hurdle when applying for a personal loan from a bank. NBFCs, on the other hand, are often more flexible and offer lenient eligibility criteria. They understand that borrowers might have varying financial obligations. Instead of rigidly sticking to a strict income-to-EMI ratio, they consider your overall financial health. To the extent that they may club the income of a co-applicant in a personal loan. This flexibility makes it easier for you to get approval for a personal loan even if your income-to-EMI ratio is higher than what banks typically allow.
Tailored Loan Products
One of the best things about NBFC personal loan is the range of customized loan products they offer. NBFCs understand that every borrower has unique needs and financial goals. They cater to a broader audience and understand that not all borrowers can fit into the narrow requirements set by banks. For instance, they also offer more personalized loan products tailored to your unique financial situation, such as debt consolidation and personal loans in the form of an overdraft.
These tailored loan products come with flexible repayment options, allowing you to choose a plan that fits your budget. This customization makes it easier to manage your finances and repay the loan without undue stress.
Faster Processing Times
Time is often of the essence when you need a personal loan. Many NBFCs offer instant or same-day approvals, and the funds can be disbursed in 1-2 days. This speed can be crucial if you need funds urgently. Many NBFCs also offer the convenience of online applications, making it easy for you to apply from the comfort of your home.
Improving Your Credit Score
If you’ve had a few financial hiccups a few years ago, NBFCs are more likely to overlook these and focus on your current ability to repay the loan. This makes NBFC personal loans accessible to a broader audience.
Taking a personal loan from an NBFC can also help improve your credit score. By making timely payments on your loan, you demonstrate financial responsibility, which is reported to credit bureaus. This can positively impact your credit score, making it easier to secure future loans from both banks and NBFCs.
3. Finding the Right NBFC – Tips for Selecting a Trustworthy NBFC
Choosing the right NBFC for your personal loan is crucial to ensuring a smooth and beneficial experience. With numerous options available, it can be overwhelming to decide which NBFC to trust. In this guide, we’ll walk you through some essential tips to help you select the best NBFC for your needs. When you need a quick NBFC loan option, these tips will help you make an informed decision.
Choosing the Right NBFC
When it comes to choosing the right NBFC, there are several factors you should consider. First and foremost, research is key. Look for NBFCs that have a good reputation and positive reviews from customers. Word of mouth can give you a fair idea about an NBFC’s reliability.
It’s also essential to check the NBFC’s credentials. Ensure that the NBFC is registered with the Reserve Bank of India (RBI) and adheres to regulatory guidelines. This ensures that the NBFC operates within the legal framework and offers fair practices.
Interest Rates and Charges
One of the most critical aspects to consider is the interest rates and additional charges. Different NBFCs offer different interest rates for personal loans. Compare the rates offered by various NBFCs to find the most competitive one. However, be cautious of extremely low rates as they might come with hidden charges.
Besides the interest rate, look into other charges like processing fees, prepayment penalties, and late payment charges. A clear understanding of the overall cost of the loan will help you avoid any unpleasant surprises later.
Loan Amount and Tenure
Another factor to consider is the loan amount and tenure offered by the NBFC. Depending on your needs, you might require a specific loan amount. Check if the NBFC can accommodate your required loan amount. Additionally, look at the repayment tenure options. Flexible repayment terms can make it easier to manage your finances and repay the loan comfortably.
4. Applying for an NBFC Personal Loan
Applying for an NBFC personal loan can be a hassle-free process if you know the steps involved. Most NBFCs have simplified their application processes to make it easier for borrowers.
At Joy Loan, with over a decade of expertise, we guide you through every step, ensuring clarity with simplified documents. Contact us to make the entire process swift and effortless. Our extensive network of 50+ lending partners guarantees you the most competitive rates tailored to your needs.
Quick Approvals and Disbursals
After submitting your application, the NBFC will review your documents and assess your eligibility. If everything is in order, you can expect quick approval, often within a day or two. The loan amount is then disbursed directly to your bank account, providing you with the funds you need promptly.
Building a Relationship with Your NBFC
Once you’ve chosen an NBFC and secured your loan, it’s beneficial to build a good relationship with them. Making timely repayments and maintaining good communication can help you in the long run. This relationship can be advantageous if you need another loan in the future, as the NBFC might offer better terms based on your repayment history.
5. Conclusion
Getting a personal loan rejected by a bank can be disappointing, but it doesn’t have to be the end of your financial aspirations. NBFC personal loans offer a flexible, faster, and often more lenient alternative. They can accommodate varied financial requirements and provide customized loan products that banks may not. By understanding the differences in criteria and the benefits of NBFCs, you can make an informed decision and find the financial support you need, even after a bank rejection. So, if you ever find yourself turned down by a bank, remember that NBFCs are there to help you bridge the gap and fulfil your financial needs.
