In a country like India where the financial resources of the consumers are always scarce, providing them with adequate credit facilities is important so that they can purchase commodities according to their desires and they can also spend the money for more important purposes. For this reason, the two primary types of loan facilities.
Before we indulge in an analytical comparison between home loans and gold loans we need to identify how both these forms of loans function and help in creating credit liquidity in the economy. For differentiating between these two forms of loans we would be using the parameters of definition, usage, and functioning so that they can be identified according to the features of both these types of loans.
Both gold loans and home loans are very important for growing liquidity position in the country and thus we will differentiate between these two forms of loans so that more clarity can prevail in the decision-making process-
Definition- The first criteria according to which both gold loans and home loans can be differentiated include the definition of the concept of the loan and the other associated features. Firstly, gold loans are secured loans where the borrower deposits gold jewellery, ornaments, and other liquid assets to private commercial banking institutions, the banks further value the amount of gold deposited by the borrower and then provides him with the amount of money according to the specification mentioned by him. The associated feature of a gold loan is a loan to value ratio which states that in this concept the valuation of the gold deposited is done through necessary instruments.
The amount of money that can be provided as the loan is 75% of the total gold that has been deposited by the borrower to the banking institution. Now we come to the definition of home loans. Home Loans refer to the amount of money which is borrowed from the private commercial banking institutions by the borrower when they are in search of a housing property which they can either use for residential purpose or leasing purpose.
In the case of home loans no collateral securities are to be maintained by the borrower as they would get the loan amount for the specific purpose and according to the tenure that has been specified in the contractual agreement between the banking institution and the borrower of the loan amount. It is evolved to facilitate the borrowers and help them to inject money into the economy are the home loan and gold loan online facilities.
Functioning and Usage- The next criteria based on which the differences can be identified and pointed about between gold loans and home loans is the functioning and usage property and criteria for a home loan and a gold loan thereby explaining how both the processes are responsible for contributing to organizational growth.
Firstly gold loans function when the borrower deposits the adequate collateral securities to the Oriental Bank of Commerce gold loan interest rate and upon the correct valuation of the deposits that are submitted, the loan amount is provided by the banking institutions. The borrower then makes the consumption decision according to the loan amount that has been provided to him by the banking institution from which the loan has been taken. On the other hand, home loans function in a completely different manner.
In the case of home loans, the borrower applies to the loan amount that is granted by the banking institution, the loan amount is significant as the cost of a house or an apartment is higher than that provisioned for gold loans. The tenure for such types of loans are also high as the loan would take some time to repay. Thus the loan provided by the banking institution can only be utilized for the purchase of residential property which can either be used to reside in or can be used for leasing and renting purposes. Thus the mode of functioning and the purpose of both these types of loans are different.
Conclusion
Thus this study would help you identify the differences between these two aforementioned types of loan facilities.
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