The pandemic has enabled the commuters to avoid crowded places and public transportation such as metro, taxis, and local trains. Travelling safely now has a new meaning that includes owning a two-wheeler to stay away from crowded public spaces. As the increase in demand for bikes and scooters continues, lending institutions provide their customers with competitive bike loan interest rates to capitalize on this situation. There is a dramatic shift away from public transportation options to single-occupant vehicles such as bikes and scooters. For emergencies like the purchase of urgent medicines, people use two-wheelers for grocery shopping. Subsequently, interest rates on two-wheeler loans are also dropping, and buyers are happier than ever. But then the big question arises - loan from banks or NBFCs?
Bank borrowing usually requires conventional paperwork and robust lending procedures that make business financing a time-consuming affair. On the other hand, NBFCs allow for easy disbursement of funds, with their minimum documentation requirements. You don't have to go through stringent terms and screening procedures for loans and get funds quicker. Note that two-wheeler dealers can lure bike enthusiasts with seasonal offers, and if the consumer does not get the scooter loan on time, there is a higher possibility of missing out on the proposals. For obvious reasons, a borrower would like to opt for a financial institution that has a process free from hassles. Hence NBFC scores better in this segment which empowers the borrowers with a rapid disbursal of funds.
The interest rate on loan could well be the make or break factor for a borrower, considering all conditions to be stable. Therefore, it is no surprise then that a loan seeker's interest rate has historically been the primary concern. One of the most critical components for two-wheeler finance has always been the interest rate because it can facilitate the repayment phase.
It's tough to get a vehicle loan from a bank if your CIBIL credit score is low. Some banks have become much stricter due to bad loans piling up and don't even accept anything less than a benchmarked score. Meanwhile, in determining your creditworthiness based only on your credit score, NBFCs are not that rigid. With an optimal credit score, you may still have a fighting chance, although the loan may cost a little more than expected.
Some forward-thinking NBFCs and Fintech firms are now looking beyond credit score and credit history to determine a loan applicant. They use artificial intelligence (AI), machine language (ML), and social media quotient to determine a person's creditworthiness. In contrast to banks, NBFCs will be the first to implement these new-age lending methods and procedures.
Documentation is more straightforward, and the processing time is also faster in NBFCs. They have less rigorous paperwork than banks and have a speedy process of sanctioning home loans to borrowers. NBFCs have the flexibility to offer flexible loan periods, processing fees, and competitive interest rates to broader segments of borrowers. Overall, NBFCs are more forthcoming and versatile when authorizing scooter loan applications. So, if you fail to get a vehicle loan from a bank (maybe due to inadequate income or you are unable to meet their other eligibility criteria), then you may approach an NBFC like Muthoot FinCorp.
Regardless of the sector, customer service, i.e. customer experience, has taken the front seat these days. The wheels of both banks and NBFCs keep turning day and night to meet the public's financial obligation. But when it comes to dedicated customer support, banks get outpaced by NBFCs most of the time. On their portal, you are allowed to keep a tab of all your loan information, costs, and payments to your online account. Additionally, you are assigned a CRM (customer relationship manager) attending to all your questions or any complication you face related to your loan and help you handle your loan comfortably.
Speaking from a customer's perspective, NBFCs fare better for their competitive interest rates and customer experience than their banking counterparts. Due to heavy competition in the financial phase, borrowers have the responsibility to apply due diligence while choosing two-wheeler finance for their dream bike.