For people who are looking for a respite from this global Covid-19 pandemic-induced financial woes, gold loans can be a great option. With gold prices at an all-time high, gold loan has become a lifeline for many people including small businesses, traders, self-employed, salaried and even farming community.
One of the most important things to consider while looking for a financial institution that gives gold loans is selecting between a bank and a NBFC (Non-Banking Financial Company). Banks as well as NBFCs provide almost similar deals but still it is important to make the right choice. Read on to know which is the best option for you;
Gold Loans in India
Rate of Interest
Interest rate obviously comes first on the checklists of many people. It is determined by how much it costs the lenders to arrange for money. As NBFCs do not have access to huge deposits, the rate of interest they provide are considerably higher as compared to banks. Interest rates for NBFCs can go as high as 24 to 29 percent while for banks like HDFC offers something between 11 to 16%.
Loan to Value
Next is Loan to Value or LTV, which is the amount of loan you can receive on specific collateral. Take for example, on gold worth Rs. 5 lakh, a person can get a loan of up to Rs. 3.75 lakh. But, relative to the interest he or she pay, a gold loan from a bank is lower than a NBFC.
Tenure
Whether you need money for short-term expenses or for long-term, gold loans offer you with immediate liquid cash. Compared to Non-Banking Financial Company, banks give up to 50 percent longer loan tenures.
Repayment
Here you will have three basic repayment options to select from:
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EMIs - For term loans where EMIs are paid on monthly basis, you can select a regular repayment schedule that covers both principal & interest.
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Upfront interest
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Bullet payment - Here you can repay the interest & principal in one lump sum on maturity.
Convenience
If compared to other loans like personal loan, taking a gold loan is easy and simple. Besides, gold loans are processed quickly as they don't require you to provide your credit score or income proof. Therefore, banks and NBFCs sanction gold loans on the same day or within a few hours. If, however, you are looking for a super-quick gold loan, HDFC Bank disburses gold loans in just 45 minutes with minimal documentation.
Charges
Fees or charges is equally important to consider. There may be hidden penalties or charges that you may be not aware of. By understanding various terms & conditions will definitely save you from a sudden unpleasant surprise.
Customer service
Quick customer service is an important aspect of any loan and as a borrower, you can have urgent queries that must be addressed immediately.
Gold Loan SBI
State Bank of India offers 3 types of gold loan plans;
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Gold Loan – A person either single or jointly with a steady source of income can take this plan by pledging their gold.
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Realty Gold loan – This plan is exclusively for SBI housing loan customers.
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Multi-Purpose gold loan - It is mainly for those who are engaged in various agriculture activities. It helps them pay back their loan easily and comes with a convenient repayment plan.
Conclusion
A gold Loan can help you in fulfilling your financial needs or requirements on your own. In addition, a gold loan from a trusted financial lender can help you stay financially afloat.
