The benefits of taking a two-wheeler loan from an NBFC
Article by Drivio | 10th Mar 23
The choice of your two-wheeler loan provider goes a long way in defining your ease of repayment. Do you know that as much as 75% of motorcycles in India are purchased through loans?
Right from qualifying for the financial privilege, loan processing, and getting lower interest rates, it pays to stick to the right lender. Obtaining a loan from a bank or an NBFC, it’s easy to finance your motorcycle. Besides, bike loans happen to be a popular means of financing these purchases.
Well, you might land in a dilemma, thinking about whether to approach a bank or an NBFC to finance your two-wheeler. It’s time to understand the NBFC loan advantages, given that there are several myths stating that bank loans involve lower interest rates.
In this article, we have comprehensively discussed the loan benefits of NBFCs over banks.
The difference in interest rates between banks and NBFCs
To understand all the NBFC loan advantages, borrowers should understand how banks and NBFCs work in the first place.
As financial institutions, both banks and NBFCs are regulated by the RBI (Reserve Bank of India). However, the acts governing banks and NBFCs differ. While banks need to adhere to the Banking Regulation Act of 1949, NBFCs comply with the Companies Act, 1956. As a result, NBFCs enjoy the privilege of more leniency during their operations.
So, banks habitually comply with the guidelines that RBI provides them with. The interest that banks charge on two-wheeler loans may vary according to the RBI policies and corresponding forces in the market.
However, RBI doesn’t decide the interest rate that NBFCs can charge. Rather, the actions of NBFCs depend on the RPLR (retail prime lending rate). Therefore, NBFCs are better poised to compete with banks by offering competitive rates of interest. Naturally, these financial institutions can offer better loan benefits in terms of lower interest rates to their clients.