Quality education is always worth our time, effort and importantly investment. Important decisions like this require a thorough run through of options so that you are well informed of the pros and cons of your decision. The choice between banking and non-banking corporations is commonly debated among the public either because of misinformation or lack of information. This article will help to be a quick guide before you decide on who to go to for educational loans.
The key difference between a bank and an NBFC:
Understanding the underlying difference between the two may settle a lot of shadows for us.
Banks are overseen by the Reserve Bank of India
These corporations are regulated by the Companies Act 1956
They are entitled to be part of your payment process.
They cannot accept or issue deposits, drafts or checks
However, the commonality between them is that they both can offer loans! Now the key difference being established, the services provided by each can be compared.
- Loan Eligibility:
NBFCs have the longer rope in sanctioning your loan compared to the banks. NBFC determines loan eligibility based on your repayment capacity, credit score, etc. While banks on the other hand make you eligible based on your collateral, say home value. Bank loans exclude costs involved in stamp duty and registration procedures, while NBFCs will craft plans to include these costs within your loan.
- The paperwork hassle:
Banks have stringent and thorough process with paperwork, NBFC on the other hand have been able to achieve the same end through relaxed paperwork process. You may want to look out for both of these options when choosing an educational loan.
- Credit Score friendly:
Banks and NBFCs favor loans to people with high credit scores, however, in comparison to banks, NBFCs are friendlier to people with low credit scores. You could choose what best helps your credit score.
- Customized services:
If caught up with the busy schedules while looking out for educational loans, you may want to consider accessibility to information and the time taken to access services from the lenders. NBFC will come handy for busy schedules, as they provided customized services and assistance in terms of visa counseling, counseling, door step services etc. Banks on the other hand do not owe you that benefit.
- Processing time:
Time is the most essential factor in any case. Delays and uncertainties can be frustrating and anxiety inducing. The loan approval process is shorter with NBFC compared to public sector banks, unless you have a favored relationship with your branch manager by being a long-term customer. Incases otherwise, NBFC saves you from sweating in the waiting time.
An informed choice always saves time, effort and investment. Each of the methods has its own pros and cons, considering what is at stake in each method and what is there to benefit in each will help you arrive concretely at a smart decision.