When you apply for a Gold loan, the first thing that comes to mind is why take out a Gold Loan when other choices may provide you with the finances you need.
The simplicity and speed with which this loan may be approved and disbursed make it superior to other loan choices. It also has substantially cheaper interest rates than unsecured loans.
Having a gold or silver piece of jewellery as collateral is a significant factor in making this loan straightforward to complete, as opposed to an Unsecured Loan, which doesn’t have this choice.
When a person understands the significance of a gold loan compared to other loans, the next issue is whether it should be obtained through a bank or an NBFC. Read below to know more in detail.
Learn about the recent increase in the loan industry
Obtaining financial aid against gold is more straightforward and quicker than obtaining credit in any other way. With gold loans, the most significant thing is that you may get your money the same day and at the low rate of interest on gold loan in India possible.
Financial institutions, like banks and NBFCs, have concluded that the increase in gold demand after COVID-19 is exponential.
Many NBFCs have devised innovative strategies for consumers who want to borrow money against their gold. They’ve also included a loan calculator on their website to assist customers in selecting the most acceptable loan deal.
NBFCs have revolutionised the loan industry landscape forever with their most delicate lending technique.
From the comfort of one’s own home, one may get a gold loan with the lowest interest rate in only one day. On the day you apply for a Bajaj gold loan, they will evaluate your gold at the current gold price.
Before deciding on a loan, keep in mind the following points
Gold loan eligibility criteria: In the case of non-banking financial companies (NBFCs), there is no stringent examination, while banks have specific eligibility criteria that customers must meet to complete this loan, as well as Documentation and other requirements.
Gold loan interest rate: Compared to other banks, the interest rates given by nonbank financial companies (NBFCs) are more excellent. They have a higher cost of funds than banks since they get their money from banks.
Loan to value ratio (LTV ratio): LTV is the amount of money a financial institution lends as a percentage of the gold’s worth as collateral. Since recently, NBFCs have been allowed to provide 75 percent of the current market value of gold instead of 60 percent. Banks will lend up to 80% of the purchase price.
Tenure: Banks often give loans with terms ranging from one to three years, while NBFCs typically offer loans ranging from three months to one year. As a general rule of thumb, a longer loan duration will entail a higher interest rate, while a short one will risk losing your home at auction sooner than you want.
Loan repayment: Borrowers using NBFCs may pay just the interest throughout the loan’s term and pay the principal at the end. Most banks, particularly public sector banks, provide gold loans that are term loans, which require monthly loan repayment of both interest and principle. Prepayment is usually permitted without penalty by most NBFCs. Banks do not provide this service.
Convenience: You could find it handy to go up to an NBFC near your house to get a gold loan if you reside in a city, where you might find it challenging to get a loan elsewhere. NBFCs have grown in popularity over time and now have a greater penetration rate than banks. The same cannot be said for banks; the branch where you have an account may be a long-distance away.
Customer service: Clients expect banks to offer a variety of services. Since gold loans are a minor percentage of their entire product offering, they take longer to complete your application. To finish your loan procedure, you may need to make two or three visits to the bank. Gold loan NBFCs use a more targeted approach and, as a result, are more likely to provide speedier service.
Due to the reason that gold loans make for a small percentage of their total offering, lenders take a long time to process your application and fund your account. You may need to visit the bank two or three times to complete the loan process. The Bajaj gold loan has a more focused strategy, which means they are more likely to give faster customer service.
