Unexpected daily expenses such as medical bills, groceries, or transport costs require immediate financial solutions to be provided. In such situations, many people look for an NBFC micro loan because it offers fast approval and simple eligibility.
However, the primary concern still exists: Is taking a micro-loan from an NBFC that is intended for daily expenses better than a bank’s offer?
Let us simplify this question.
What Constitutes an NBFC Micro Loan?
A loan obtained through an NBFC micro loan is a small-amount loan that is typically between ₹1,000–₹50,000 and is meant for covering daily expenses. Such loans are suitable for borrowers who need money,
- Quickly
- Without heavy documentation
- Through easy eligibility
- With small repayment amounts
They are suitable for gig workers, students, housewives, and low-income earners.
Reasons Why NBFCs Are Chosen for Daily Micro-Loans
NBFCs have become popular for their digital and flexible methods. Here are the reasons why their micro loans are better suited for daily expenses,
1. The Instant Approval and Fast Disbursement
Speed is one of the most significant benefits that come with NBFC micro loans.
They do digital KYC and automated checks, which result in
- Quick Application
- Approval being instant
- Disbursement is happening in minutes
Although banks generally take a longer time.
2. Lower-Income Borrowers Find Their Way Through the Eased Eligibility
Unlike banks, NBFCs do take in borrowers that fall within these categories,
- Having a little monthly income
- Receiving income in cash
- Having irregular earnings
- Being the case of having little or no credit history
The same cannot be said for banks, as they usually ask for stricter financial documents and stable salaries.
3. Smaller Loan Amounts Ideal for Daily Requirements
It is very rare for banks to provide such small loans, the minimum being ₹20,000, but NBFCs have really low micro-loan amounts starting from
- ₹500
- ₹2,000
- ₹5,000
This, therefore, makes an NBFC micro loan an effective solution for daily and sudden need expenditures.
4. Minimal Documentation
Typically, NBFCs would need,
- PAN
- Aadhaar
- Bank statement
In comparison, banks could ask for salary slips, ITRs, and job proof.
Where Banks Still Have an Edge
Although NBFCs are quite easy to work with, banks are still providing,
1. Lower Interest Rates
Banks generally charge lower rates as a result of tighter regulations.
2. Longer Tenure Options
These are suitable for big loans, not for petty daily expenses.
3. High Trust Factor
Some borrowers tend to banks because of the latter’s long-standing reputation.
NBFC vs Bank: Which One Is Better for Daily Expenses?
An NBFC micro loan is usually the better option for quick, small, short-term borrowing because it provides,
- Faster processing
- Smaller loan amounts
- Greater flexibility
- Digital and paperless application
A bank may be more suitable if you are looking for a low-interest rate, long-term loan.
Who Should Opt For an NBFC Micro Loan?
This option is suitable for,
- New borrowers
- Candidates with low or unstable income
- People experiencing temporary financial difficulties
- Anyone who requires a small sum of money urgently today
Conclusion
In the end, NBFC micro loans often provide a faster and more flexible option for people who need quick money for daily expenses. Their simple process, minimal paperwork, and friendly eligibility rules make them ideal for small, urgent needs. Banks may offer lower interest rates, but their long approval times and strict checks are not always practical for borrowers seeking immediate support.
So, if speed and convenience matter most, an NBFC micro loan is usually the better choice. But if you want long-term stability and can wait, a bank loan may suit you more.
