Gold Loan Vs Personal Loan

Gold loans are more preferable because of some of the reasons. Any Indian citizen who is above the age of 21 years but below the age of 70 years can have the right to avail of a gold loan. Any Indian citizen who is a professional or a businessman or a farmer, the trader will be able to avail of the gold loan. There are many types of the bank which provide the gold loan at a very cheaper rate of interest.

For example, there are certain banks like Federal Bank that provide the gold loan interest rate of 8.50 % while on the other side of the coin Muthoot finance Group offers the gold loan at 11.99 %. In this way, there will be many different kinds of and loans are available in the market offering gold Loans at different rates of interest. There are advantages of gold loan due to which it is preferred all over the world. If a person wants to do a startup by doing business but not getting enough loan. In the type of gold loan, it is possible for anyone who is wanting to set up a business with his new idea and gold in the form of any ornament or the form of any coin with him in his house.

The different types of short-term loan payments in the case of the Gold Loan are one of the most vital advantages which an individual can get. Some types of loan repayments have been implemented for example bullet payment. Payments are those kinds of payments that are whenever a person is having a lump sum amount and wanting to reduce the burden of the loan a part of the payment can be made as a bullet payment. It reduces the burden of the loan as a new restructuring of the loan can happen with the reduced rate of loan as well as reduce the principal of the loan. While we check personal loan rate of interest is very much higher than that of the gold loan. The reason for having the gold loan is one of the most secured forms of loan and gold loan online can be applied as the collateral which is the gold itself placed against the bank and then dispersal of the loan amount is done.

A personal loan is an unsecured type of loan where there is no security or Collateral is engaged with the lender. In this way, the lender is at its full freedom to charge any rate of interest and does exploit the safeguard of the customers who can't tolerate so high a rate of interest. There are few disadvantages of the personal loan, most people don't like to take the risk unlike Gold Loan Interest Rate. If there is any kind of security and the payment is not done properly then the company can sell or auction the collateral used for taking a loan. In most cases, it has been seen that the worst thing about the personal loan is the highest rate as compared to any other type of loan.

Conclusion:

Due to this reason when there is an alternative of the particular service, people are shifting towards the other different types of loan arrangement at any cheapest rate that is a gold loan. As the gold itself is collateral and this is the reason for which the rate of interest in the gold loan is the lowest as it is secured while on the other side of the coin in the case of the personal loan the risk factor is too high due to which rate of interest is too high and the companies collect a good amount by the way of the high rate of interest in this way exploiting business continues.

GOLD LOAN EXPLANATION

Gold Loan is a secured loan that can be taken by pledging/ mortgaging gold assets (jewelry, coins, bars, etc.) as collateral with a bank or non-banking financial company (NBFC) that deals in gold loans. The bank or the non-banking financial company will give a loan amount based on the market worth of the gold assets according to the pertaining gold prices. The gold assets are returned after the borrower makes full repayment of the loan and the interest amount to the lender.

Gold Loan Process

Gold ornaments can be pledged and the purity of the gold determines the value of the loan amount. The customer takes the gold to the lending bank or a non-banking financial company where they check the gold’s purity and accordingly determine the loan amount. According to RBI guidelines, the loan amount can be up to 75% of the estimated value of gold.

The lending organization also charges a processing fee as per the policy. It is always advisable to apply for a gold loan facility with a credible lending organization such as Canara Bank Gold Loan. These organizations keep the gold secured in a vault so there is no chance of any mishappening. To smoothly process a gold loan application, the borrower needs to have one identity proof (passport, driver’s license, Aadhaar card) and address proof (electricity bill, phone bill) with proper KYC (Know your customer). Anyone who is 18 years of age and above can pledge gold assets to apply for a gold loan. With proper documentation, a bank like Canara Bank can process the gold loan application within just 45 minutes.

Gold Loan Repayment Method

Lending organizations provide numerous easy and convenient options for the repayment of the loan:

1. Upfront Interest- Payment of full interest amount in the beginning and principal amount in the end.

2. Bullet Repayment- No option of EMI here. The interest and the principal amount are paid together at the end of the tenure.

3. Regular EMIs- Regular monthly installments.

4. Overdraft facility- Interest is to be paid only on the utilized amount.

The repayment tenure depends on the policies of the lending organization and is generally between 6 months and 2 years. Some organizations also provide the option of tenure extension by renewing the loan agreement. Before taking a gold loan, the borrower needs to understand the terms of repayment because, in case of default, the lender can auction the gold assets to recover the loan amount. The interest rates on gold loans are lower than other loans such as personal loans, loans against credit cards, etc. The interest rate varies from 11% to 17% depending on the policies of the lending organization. Gold Loans from trusted banks have interest rates according to market standards than non-banking financial companies (NBFCs). Since banks have better security systems, borrowers can be assured that the gold is safely stored.

Gold Loan Eligibility

The factors that affect the Gold Loan Eligibility of a borrower are:

1. Weight of the overall gold jewelry- the higher the overall weight, the higher would be the loan amount. The maximum loan amount can be up to 90% of the overall gold value, which is directly dependent on the weight of the gold. While the weight is calculated, only the yellow gold is taken into consideration leaving the gems, stones, diamonds, etc. aside.

2. Purity of the gold- The purity of the gold is determined by carats. The higher the purity of the pledged gold, the higher would be the loan amount. The eligible amount of the loan depends on the present market prices of gold and the market prices change almost every passing day. Some lenders do not give a gold loan if the purity of the gold is less than 18kt.

Conclusion

While taking gold loans from any organization, borrowers must ensure to check the credibility of the bank or the NBFC to be chosen, the present market price of gold, the competitive interest rates, repayment terms, and conditions, RBI guidelines, etc.

Why Pick A Gold Advance?

What is a Gold Loan?

Gold credits are gotten advances endorsed by banks and other loaning organizations, where they acknowledge Gold decorations or coins from clients as security. The worth of reaching out to the client is typically a level of the estimation of Gold. For the most part, up to 60% of the measure of Gold offered as a credit after the estimation.

Why Choose a Gold Loan?

Brief handling and dispensing: Once an individual has moved the Gold to a monetary foundation, the advance sum will be dispensed to the borrower in the recommended way. The Gold will be kept with the loaning organization as security until all advances are reimbursed. The bank will name experts to do the Gold cutting right on the spot, so the way toward handling and pulling out cash can be speeded up, in this way assisting with saving a great deal of time.

Low-financing cost: The loan fee charged on a Bank Of India Gold Loan is low contrasted with unstable credits. Since the bank keeps up the borrower's Gold as insurance, it doesn't need to stress over accepting the credit, in case of a non-installment of the advance. A few banks offer Gold loaning rates as low as 10.5%, while financing costs are higher.

Gold remaining parts free from any danger: Banks and other monetary establishments offer triple security for Gold trimmings and coins if one can send them as a guarantee. They will be put away safely in the ledger for the term of the guaranteed advance and will be gotten back to that endless supply of the credit sum. The protected foundation in the strong bank room joined with reconnaissance gives edge security given by bank locks over home workers.

The advance sum can be utilized for any reason: The bank doesn't restrict the borrower to how he needs to utilize the advance. Individuals can take it for venture or meet costs identified with health-related crises, training, marriage, marriage, and so on One can likewise utilize acquired assets to fund fundamental buys, upgrade home adornment, and fix, in addition to other things, as long as the purpose isn't illicit.

Essential records needed: in the case of a Gold credit, each of the ones needs to do is present a couple of fundamental archives like confirmation of ID and verification of address. Since the danger concerning the borrower is low (as given as a safe credit), the prerequisites identifying with the advance are negligible and straightforward.

Assists with meeting transient monetary requirements/goals: The advance reimbursement period begins at a half year and can be reached out for as long as 2 years. This permits moneylenders to reimburse advances quicker than most different credits. A Gold advance, along these lines, is an ideal choice for the individuals who need to meet any momentary monetary requirements and destinations.

A simple approach to qualify: Anyone beyond 18 years old with the privilege to a Gold Loan Apply Online most ideal choice. For certain kinds of credits, moneylenders expect candidates to be in any event 21 years of age. Endorsement for a Gold advance application doesn't rely upon the CIBIL scale or installment history, yet rather on the measure of Gold adornments, an individual intends to submit. There are no limitations on the candidate's work - mortgage holders, workers, business people, and so forth can apply for a Gold advance, as long as they have a great capacity to reimburse the credit.

Adaptable installment alternatives: While the reimbursement construction will differ contingent upon the loaning foundation, a few banks permit borrowers to reimburse the chief sum toward the finish of the term. Under this installment strategy, an individual should pay revenue on the credit time frame and the chief sum toward the finish of the advance time frame.