Banks vs NBFCs – Which is Better for Home Loans?

When you’re in the market for a home loan, most people research a lot about interest rates, repo rates, market scenarios, etc. After going through all these, you may find yourself scratching your head about whether to choose a bank or a NBFC as your potential lender. If you’re facing a similar dilemma, you’ve found yourself in the perfect spot to demystify your doubts and queries.

Bank vs NBFC

A bank is a government authorized entity that provides banking and financial services to the general public whereas NBFCs provide financial services to people without holding a banking license. Banks maintain a mandatory Cash Reserve Ratio (CRR) whereas, for NBFCs, it isn’t mandatory.

Interest Rates

When it comes to banks, the Reserve Bank of India (RBI) has a considerable influence on them. The interest rates are regulated by the RBI and the repo rate will play a huge role in deciding your EMIs.

Whereas in the case of NBFCs, they decide their interest rates by themselves. However, these interest rates tend to get influenced by the market scenario.


Tenure is the period in which you agree with the lender to pay off your loan. Longer tenure results in lesser EMIs. Lesser EMI means less stress on your wallet. Typically, NBFCs offer higher tenure than banks. This means, when you avail yourself of a loan from a NBFC, your EMIs will go easy on your wallet.


CIBIL score is the first and foremost factor a lender will look into before providing you with a home loan since it is the easiest way for the lender to check your credibility. However, NBFCs may still offer you a home loan even when you don’t have a not so high CIBIL score. .

Processing Time

Processing time is a factor often overlooked while we are on the hunt for home loans. Even though processing times vary from lender to lender it is something one should be aware of by discussing with the lender. The processing time for home loans in banks is often on the higher side whereas NBFCs offer much lesser processing time.


When it comes to documentation, banks are stricter and the approval process may become lengthy. Whereas NBFCs are more lenient and will be ready for some flexibility. Self-employed individuals who don’t have proper salary proof find it easier to get loans from an NBFC.

To Summarize

If you want to get quick loans with minimal documentation, NBFCs are the way to go. One such NBFC in which you can bank your trust is Cholamandalam Investment and Finance Company Limited. Chola offers a wide range of home loans to cater to the different sections of the society. To apply for Chola Home Loans, just give a missed call to 07874782782 or visit your nearest Cholamandalam branch to avail yourself of our services.