NBFC Personal Loan for Bad Credit: If you are looking for a personal loan but have a bad credit score, you may have some options from non-banking financial companies (NBFCs).
NBFCs are financial institutions that provide loans and other services. Some NBFCs may offer personal loans to borrowers with low credit scores, but they may charge higher interest rates and have strict terms and conditions.
Here, we will provide all the details of NBFC Personal Loan for bad credit scores in India. So, you must read the article from beginning to end.
NBFC Personal Loan for Bad Credit Review
| Article Topic | NBFC Personal Loan for Bad Credit Scores in India |
| Interest Rate | Competitive Interest rate starting from 16% per annum. |
| Loan for Bad Credit Score | Rs 3,000 to Rs 5 lakhs |
| Processing fee | The processing fee depends on the lender, loan amount, and customer credit profile. Generally, the processing fee starts from 3% on the approval loan amount. |
| Tenure | 3 months to 5 years |
| CIBIL Score | Minimum CIBIL Score: 650+ |
What is a NBFC Personal Loan for Bad Credit?
NBFC personal loan for bad credit is an unsecured loan offered by non-banking financial companies (NBFCs) to borrowers with low credit scores. A credit score is a numerical representation of your creditworthiness based on your past repayment history, credit mix, credit utilization, and other factors.
A low credit score indicates that you have a high risk of defaulting on your loan repayments, and therefore, you may face difficulty getting a loan from banks or other lenders.
NBFC personal loan for bad credit can help you meet your immediate financial needs, but it also has disadvantages.
- You may have to pay a higher interest rate, which can increase your monthly repayment amount and the total cost of the loan.
- Additional charges may also have to be paid, such as processing fees, prepayment penalties, late payment penalties, etc.
- You may also have to provide some collateral or guarantor for the loan, depending on the NBFC’s policy.
- Moreover, taking an NBFC personal loan for bad credit may not improve your credit score unless you repay the loan on time and in full.
Types of Loans for Bad Credit Scores in India
There are many loans available in India that a customer can avail of even if he has a low credit score. Here we have told you about some loans which you can apply for.
Secured loans: These are loans that require the borrower to pledge some asset, such as property, gold, or securities collateral. Secured loans usually have lower interest rates and longer repayment terms than unsecured loans. However, the borrower faces the risk of losing the asset in case of default.
Unsecured loans: These are loans that do not require any collateral from the borrower. Unsecured loans are based on the borrower’s income, credit history, and repayment capacity.
These loans usually have higher interest rates and shorter repayment terms than secured loans. It is also difficult for people with poor credit scores to get approval.
Loans from NBFCs: Non-banking financial companies (NBFCs) are financial institutions that provide loans and other services to customers who may not be eligible for loans from banks.
NBFCs are more flexible and liberal than banks in their eligibility criteria and credit score requirements. NBFCs can charge higher interest rates and fees from customers with a low CIBIL score because of the higher risk involved in giving loans to such customers.
Loans from Digital Lenders: Digital lenders are online platforms that provide loans and other financial products through their website or mobile app to their customers.
Digital lenders use technology and data analytics to assess borrowers’ creditworthiness and risk profile. They may offer faster loan processing and disbursement than traditional lenders.
However, they may also charge higher interest rates and fees than banks or NBFCs.
Peer-to-Peer Lending: Peer-to-Peer Lending (P2P) is a form of online lending where borrowers and lenders connect directly through a platform without intermediaries. These allow borrowers to obtain loans from multiple lenders who may offer different interest rates and terms.
P2P lending lenders earn higher returns by lending to borrowers who may not have access to formal credit sources. However, P2P lending involves higher risks for both borrowers and lenders, as there is no guarantee of repayment or recovery in case of default.
Eligibility Criteria for NBFC Personal Loan for Bad Credit in India
Eligibility criteria for NBFC personal loan for bad credit in India may vary depending on the lender, but there are some standard requirements:
- Applicant must be a resident of India and have valid identity proof and address proof.
- The applicant’s age should be between 18 to 60 years at the time of application.
- The minimum monthly income of the applicant is Rs. Rs.15,000 or more depending on the loan amount and tenure.
- The minimum credit score must be 600 (CIBIL) or 650 (Experian), or meet alternative criteria set by the lender.
- Must have a steady source of income and a good repayment history.
- Applicants must have at least one year of work experience, or be self-employed with a regular income.
Documents Required for NBFC Personal Loan for Bad Credit in India
To avail of an NBFC personal loan, you need to provide the necessary documents, but due to a low credit score, some additional documents may be required, which are mentioned below.
- Pan Card
- Aadhar Card Should be linked with a Mobile Number.
- Address Proof: Any one of the documents – Passport, Aadhar Card, Voter ID Card, Driving Licence.
- Identity Proof: Any one of the documents – Passport, PAN Card, Ration Card, Aadhar Card, Voter’s ID Card, Driving Licence.
- Income Proof: Last Six months’ bank statements, Income Tax Return, Salary Slip, Balance Sheet, etc.
- Business Poof: GST Certificate, Udyog Registration Certificate, Shop Registration Certificate, etc.
How to Get an NBFC Personal Loan for a Bad Credit Score?
It is important to know how to get a personal loan from an NBFC. Most non-banking financial companies shy away from giving loans even with a low CIBIL score.
However, some companies can give you a loan even with a low credit score. The process to apply for a loan is as follows:
- First of all, you have to choose an NBFC which can give you a loan.
- Download and install the application on your mobile.
- Register using your mobile number and email ID.
- Provide all the documents asked by the app.
- Now select the eligible loan amount and tenure time through the app.
- Next, the app will show you the repayment schedule, such as the due date and repayable amount, read it carefully and click on the ‘OK’ button.
- Now click on the ‘Add Savings Bank Account’ button to receive the loan amount in your bank account.
- E-sign the loan agreement using the OTP sent to the registered mobile number.
- Once you sign the agreement, your application is forwarded for processing.
FAQs Related to NBFC Personal Loan for Bad Credit
What is the minimum CIBIL score for NBFC?
The minimum CIBIL score for NBFC depends on the type and policy of the lender. Generally, most lenders would prefer a CIBIL score of at least 650 and above. Some non-banking financial companies (NBFC) may be lenient and consider a score of 550 as the lower limit. A higher CIBIL score indicates that you are more likely to repay your loans on time, while a lower CIBIL score implies that you may have defaulted or delayed your payments in the past.
What are the 50% criteria for NBFC?’
The 50% criteria for NBFC are a test that the Reserve Bank of India (RBI) uses to determine whether a company is engaged in the business of a non-banking financial company (NBFC) or not. The 50% criteria are applied to ensure that only companies predominantly engaged in financial activity get registered with the RBI and are regulated and supervised by it. Hence, if there are companies engaged in other activities such as agriculture, industry, trade, services, or real estate as their principal business and are doing some financial business in a small way, they will not be regulated by the RBI as NBFCs. This test is also known as the 50-50 test or the principal business criteria.
How can I repay my loan?
You can repay your loan by visiting the repayment section and making an online payment. NBFCs support payments through net banking, debit cards, UPI, Paytm wallet, and banking transfers. Use the bank transfer option to avoid convenience fees.
Where is my loan disbursed?
The loan amount is transferred directly to your bank account, which is provided by you during the loan application process.
What happens if I don’t repay on time?
Penalty charges will be applied for every day that the loan is overdue. Your credit score will be updated with the credit rating agencies (CIBIL, CRIF High Mark, etc.) as a defaulter, making it difficult for you to take a loan from any bank or financial institution in the future. Companies also check an individual’s credit score and may not employ you if you have a bad credit score.
