Time for cash in hand:
Gold lending is guaranteed loans supported by your promised gold ornaments. So the NBFC or bank you borrow only checks the gold ornamentation that you commit to cleanliness, strength, and rightful ownership. Since creditors do not have to search on other types of loans other than CIBIL, the time to obtain a Gold loan per gram varies from 15-minutes and about 2-3 hours. Bank of India Gold loan offers immediate approval of gold loan within a few hours.
Because of the fast disbursement, this loan is suitable for any time-sensitive requirement. On the other hand, personal loans will take anything from 2 days to a few weeks to disburse. Borrowers must have a high CIBIL score and arrange for guarantors when applying for a personal loan. Banks require proof of income and undertake rigorous due diligence to assess an applicant's ability to repay. Processing and disbursement of the loan take at least two days to a couple of weeks. This kind of delay makes it unsuitable for time-sensitive requirements.
Eligibility for loan amount:
The amount of the loan decides the adequacy of a given form of loan for the specific loan. Loans that are not required, even though they are receiving other benefits, are not viable. Gold loans provide a simple advantage in this sector because the eligibility of your loan for gold loans and nothing else decides your gold.
In a gold loan, the Gold loan per gram sum is calculated based on its weight. In general, lenders bid 60 to 75 percent LTV (Loan to Value Ratio). It, compounded by the day's gold price, decides how much per gram of gold you will get. You don't need to follow other requirements like a score/minimum earnings/etc.; if you have much gold to support your loan requirement. Even a ZERO individual with low CIBIL revenue can get lakhs of rupees, so long as he is given enough gold.
Compare your loan with a personal loan where your eligibility is determined by your history of payments (CIBIL score), revenue, and several other items (say, your company!). These are not entirely under your control. For all severe needs, this alternative is therefore not viable.
Interest Rate
In general, Gold Lending companies do not alter the interest rate according to the borrower's risk profile. It ensures that all borrowers earn equal interest rates, provided a scheme. These range from 1% a month to 2.5% a month, depending on the NBFC and the system. You can also get rid of the processing cost, assessment fees, stamp duty, etc. if you decide to borrow from the scheme in an elegant manner.
On the other hand, personal loan interest rates are determined by your CIBIL ranking, salary/income, educational history, and other factors. It makes a personal loan prohibitively expensive for those with a low to no CIBIL score and low-income. Besides, failure to pay EMIs on time would boost potential interest rates.
Monthly Repayment Amount
Customers are not typically expected to pay annually in case of a gold loan. At NBFCs, the customers are expected to pay the principal and accumulated interest at the end of the loan tenor with gold loans tenor of three months to six months. Banks or lenders like Bank of India Gold Loan offer monthly payment gold loans, restricted to unpaid interest.
However, in a personal loan, the customer has to pay the unpaid interest for monthly EMIs and a principal's portion. In contrast to a gold loan, this makes the monthly cost of a personal loan more outstanding upon payment of a Gold loan per gram from an NBFC; users need more versatility.
Summary:
You better arrange money using a gold loan for all practical purposes than a personal loan. Your gold is extremely safe if you decide on the right company with safe processes that are entirely transparent and certified by RBI.
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