If we reside in urban areas there a good chances that we come around various loan options such as banks, Non-Banking Financing companies (NBFC), or Fintech start-ups. However, each of them provides loans but still has a unique place in the financial ecosystem. It can sometimes become a hard choice to determine what option to choose when we have a requirement for the money. In this blog, we will be explaining the main difference between these finance options and how to opt for the one medium that fits your requirement. Fintech and NBFC: Meaning To understand the difference, it important to understand their meanings first: Fintech Financial technology (Fintech) is used to explain new tech that seeks to automate and improve the use of financial services and delivery. Within this definition, Fintech companies usually operate to facilitate company owners, consumers, and corporations to better handle their functions of financials, processes, and lives by utilizing dedicated software and the process of algorithms. This can be carried out by Smartphone users and computer applications. The term Fintech is a grouping of "financial technology". Fintech also comprises the expansion and use of crypto-currencies including bit coins. That one section of fintech may see the most headlines; a huge amount of money still lies in the traditional global banking industry and its multi trillion dollars as market capitalization. Non Banking Financial Companies (NBFC) Non banking financial companies (NBFC), also known by the name of non bank financial institutions (NBFIs) are a financial establishment that proposes various banking services but does not have a banking permit. Majorly, this establishment is not authorized to take traditional demand deposits or any readily available funds, such as those in saving or checking accounts—from the public. This restriction keeps them outside the extent of predictable oversight from union and state financial regulators. Loans via Fintech and NBFC Loan via NBFCs (Non-Banking Finance Companies) – These types of companies are the next leading class of formal lenders. NBFCs usually focus in financing assured asset classes for example; Bajaj Finance has a strong grip on consumer sturdy financing. They are more flexible than traditional banks but they still have a bundle of slow adoption of technology and manual processing steps.Loan via Fintech Startups – Fintech (Financial Technology) startups are tech powered businesses whose goal is to innovate with respect to products, customer service methods, and technology. They usually have rapid disbursal of loans and offer the best user experience along with some offers of promotion. The comparison between Fintech and NBFC: FeaturesNBFCsFintechTime to receive MoneyGenerally, 4-6 daysGenerally, 1-3 daysConvenienceMediumHighDependability of Customer ServiceMediumHighInterest Basis14-20%20-27%The flexibility of RulesLowMediumInvolvement of PaperworkMediumLowProduct SpecialisationFrequentlyFrequently Comparison process ProcessNBFCsFintechVerification of documentsTypically manualTypically automatedSigning of AgreementTypically manualTypically automatedKYCTypically based on the signing of photo copies, self attestation, or eKYC for digitally superior NBFCsGenerally, eKYC or scan image upload based or virtual methods are adopted here.Other paperworkTypically highTypically low Recommendation to choose between Fintech and NBFC In the terms of Interest rates, it is clear that both NBFC and Fintech are not efficient when compared to traditional banks. It is evident that fintech companies are beneficial when it comes to terms of convenience of the user and the speed of services. NBFCs are more advantageous in terms of financial products. The following are the recommendation to choose between Fintech and NBFC: If any individual required a fast personal loan for not more than Rs 2 Lakh, then it is better to go for Fintech Startups than Large NBFCs or Banks.If any person required a loan for not less than Rs 2 Lakh, then the person should consider Large NBFCs. Another factor that is required to be considered is your own profile.If any individual has any hindrance in credit cards or previous loans, it is better to go for Fintech Startups since Fintech companies are eager to be more systematically look at the individual’s profile than just their credit score. Other lenders in the market can waste your precious time in reconsidering your application and then let you know that it is rejected because of preceding delays which shall be more than 5 years old.If a person works in a small company or a Start-up or have changed many jobs or moved between many cities recently, Large NBFCs will decline your application for a loan. For having such a profile is recommended to apply for the Fintech Startups.For the purpose of the fast personal loans, the obvious choice for the same are Fintech companiesFor the requirement for the specific asset, then it relevant to opt for the NBFC. Conclusion It is clear from the above discussion that fintech’s and NBFCs have their own advantages and disadvantages. Each of them provides loans but still has a unique place in the financial ecosystem. It can sometimes become a hard choice to determine what option to choose when we have a requirement for the money. It is completely dependent on the amount of loan, the urgency, your profile, and the loan usage to establish the right option of loan for oneself. Read our article:How FinTech Companies Help Startups to Grow?