When faced with significant financial needs, a loan against property (LAP) emerges as a reliable solution. Whether funding your child’s education, expanding your business, or covering unexpected medical expenses, a loan against property can provide the financial flexibility you need. While traditional banks are often the go-to choice for such loans, Non-Banking Financial Companies (NBFCs) have gained popularity due to their unique benefits.
In this article, we’ll learn about the top reasons to consider taking a loan against property from an NBFC, highlighting why they might be a better fit for your financial requirements.
- Simplified Loan Approval Process
Non-Banking Financial Companies (NBFCs) are recognised for their customer-friendly processes and efficient loan approvals. Unlike banks, which often have strict documentation requirements and lengthy verification procedures, NBFCs offer faster approvals with minimal paperwork. This makes them an excellent option for borrowers looking for quick access to funds.
- Flexible Eligibility Criteria
One of the key advantages of approaching an NBFC for a loan against property is their flexible eligibility criteria. NBFCs are more accommodating regarding credit scores, income stability, or employment history. This flexibility allows self-employed individuals, freelancers, or those with non-traditional income sources to access loans more easily.
- Higher Loan-to-Value Ratio (LTV)
NBFCs often offer a higher loan-to-value ratio compared to traditional banks. This means you can secure a larger loan amount against the value of your property. For example, while banks might cap the LTV at 60-70%, many NBFCs offer up to 75-80%, providing more funds to meet your financial needs.
- Competitive Interest Rates
Contrary to popular belief, NBFCs offer competitive interest rates for loans against property. While the rates might vary slightly based on your credit profile and property value, many NBFCs are willing to negotiate rates, especially for borrowers with a good repayment history or valuable collateral.
- Customised Repayment Options
NBFCs excel at offering flexible repayment plans tailored to individual borrower needs. Whether you prefer shorter EMIs stretched over a longer tenure or larger EMIs to clear the loan quickly, NBFCs provide the freedom to choose a repayment structure that aligns with your financial situation.
- Accessibility for Tier 2 and Tier 3 Cities
NBFCs have a broader presence in semi-urban and rural areas, making them more accessible to borrowers in Tier 2 and Tier 3 cities. Their localised approach ensures that individuals and businesses in these regions can avail of loans against property without the hassle of travelling to metropolitan cities for approvals.
- Faster Disbursement of Funds
Time is often a critical factor when applying for a loan. NBFCs are known for quick turnaround times, ensuring funds are disbursed promptly. For borrowers dealing with emergencies or time-sensitive financial requirements, this speed can make a significant difference.
- User-Friendly Digital Platforms
Many NBFCs have embraced digital transformation, offering online application portals and customer service platforms. This allows borrowers to apply for a loan, upload documents, and track their application status from the comfort of their homes. Such convenience is a significant advantage for busy individuals.
- Expertise in Niche Financial Products
NBFCs specialise in offering financial products that cater to niche markets or specific customer segments. Whether you’re a small business owner, a farmer, or a professional with unique financial needs, NBFCs can tailor a loan against property to suit your circumstances.
- Inclusive Customer Approach
While banks tend to focus on salaried individuals or those with pristine credit histories, NBFCs adopt a more inclusive approach. They understand the financial challenges faced by various segments of the population and are more willing to work with borrowers who may not fit the conventional mould.
Case Study: Real-Life Example
Let’s consider a scenario:
Rahul, a small business owner from a Tier 2 city, needed ₹50 lakhs to expand his manufacturing unit. Despite having a good business record, his irregular income patterns made it difficult to secure a loan from a traditional bank. An NBFC approved his loan against property at an attractive LTV of 75%, offering flexible repayment terms. Rahul was able to access the funds quickly and successfully grow his business, thanks to the NBFC’s customer-friendly approach.
Things to Keep in Mind When Choosing an NBFC
Interest Rates and Processing Fees: Compare rates across NBFCs to ensure you get the best deal.
Loan Tenure: Choose a tenure that balances affordability with timely repayment.
Reputation of the NBFC: Opt for a well-established NBFC with a proven track record of customer service.
Hidden Charges: Review all terms and conditions to avoid surprises.
Conclusion
Taking out a loan against property from a Non-Banking Financial Company (NBFC) can be a profitable and straightforward experience. NBFCs offer flexible processes, competitive rates, and a customer-centric approach, making them well-suited to meet the diverse financial needs of both individuals and businesses.
If you are considering a loan against property, be sure to carefully evaluate your options and choose an NBFC that aligns with your financial goals. With the right lender, you can unlock the value of your property and achieve your aspirations with ease.
