The information boom is known to have facilitated the convergence of interest rates around the world, or so it seemed. On the surface, the different lending rates of many banks appear homogeneous. You can also apply cheap car loan online also known as Günstige Autokredit in German language.
But in reality, they are often very different! The interest you earn on your bank deposits, or the interest rates on various types of loans, varies from bank to bank. Imagine the difficult task of going to the bank one by one before finalizing where you can get a loan. You may very well be confused and not be able to get the best deals.
To overcome this complexity, online portals such as Bank Bazaar, Fundera, and others have been established. What is this online credit market doing? They allow potential borrowers to buy credit just like they would buy anything else online! They give you, the borrower, the option to apply to multiple banks at the push of a button, which makes the whole process easy and hassle-free.
The loan intermediaries discussed above serve payroll clerks and established businesses with a steady stream of income and those who can provide evidence. But what about borrowers who are not served by such banks? What about start-ups that have slightly poor credit ratings and moderate repayment capacity, but have a bright future? Or are SMEs that do not have collateral so they can’t convince banks to lend them?
This is where non-bank financial firms (NBFC) come in, making financial markets more inclusive and tolerant. NBFC does not have a banking license and does not provide a verification tool. However, they remain important for the credit market as they play an important role in overcoming the zero default caused by traditional lenders. NBFCs are known to take more risks and are often more flexible with their customers’ needs.