Advantages of Gold Loan over Personal Loan
Are you opting for a loan by using Gold as a collateral?
According to the World Gold Council, India's gold loan market has grown at a massive compound annual growth rate (CAGR) to Rs. 4.62 lakh crore. Organized institutions such as banks and NBFCs are the core components of retail lending. Retail consumers in India understand the enormous potential that gold loans can offer. Studies show that gold loans are more widespread than personal loans due to their acceptance.
Many of us might have faced unexpected situations where we need to arrange cash within a short period. It can be a medical emergency, helping a friend or relative, one-off expenses like a car breakdown, or household maintenance. A personal or gold loan is the answer that pops up in everyone's mind in such short–term cash needs.
Let us compare the features of a Gold Loan and a personal loan helping you take a rational decision:
What is Gold Loan eligibility?
The Gold loan application procedure is simple. Any Indian citizen above 18 years of age with primary KYC documents can apply for a gold loan. In comparison, a personal loan has a lengthy verification process. The lender may reject the loan application if you do not maintain the required credit score.
What are Gold loan interest rates & processing fees?
For gold loans, you will pay lower interest rates ranging from 9% to 29% compared to unsecured personal loans. Personal loan interest rates can vary from 10.25% to 36%. Some institutions charge higher interest rates for Personal loans if you have a lower credit score.
The standard processing fee for a gold loan is 0.1 to 1%, which can go up to 2.5% for Personal loans. We at MuthootFincorp ONE, one of the leading NBFCs, offer hassle-free gold loans with 0% processing fees.
What is the Processing time for Gold loans?
Depending on lending institutions, the disbursal time for gold loans can vary. MuthootFincorp ONE offers doorstep Gold loans within 30 minutes*, including processing and disbursal.
A personal loan is issued based on your repaying capacity, so the lender verifies your income proof, CIBIL scores, type and tenure of job, etc. Hence, it takes a considerable time for document verification.
What is Gold Loan Tenure & Repayment?
You can avail of a Gold loan for a tenure starting from 1 week to 3 years. The non-EMI structure of Gold loans is very suitable for people facing cash flow challenges. We offer different types of repayment options.
- Pay interest each month and settle the principal amount at maturity.
- Upfront interest and principal amount at the end of tenure.
- Pay interest and a portion of principal monthly.
- Bullet Repayment.
Personal loans you will repay as EMI consist of interest and components of the principal amount. Failure to pay EMI will result in a bad credit score and will attract financial charges. Early settlement charges are also applicable for such loans.
Benefits of Gold Loan in a nutshell
- Since Gold loans are secured, you can use the ornaments multiple times for future loans. Personal loan eligibility is based on many qualifying factors. Any adversities, like the recent pandemic, during a prevailing loan, may affect one of the qualifying parameters, which could affect your future borrowing capacity.
- You can get 90% of the market value of gold as a loan. (Lenders do not consider the value of any precious stones attached). Even if you don’t maintain a good credit score, you can still avail Gold Loan based on the value of the yellow metal you have.
- If you have high-interest debts that can be consolidated by availing of a gold loan of lower interest. As a wise investor, you can convert a gold loan into good debt by investing in a financial vehicle of higher returns while keeping the gold under the lender’s locker.
At MuthootFincorp ONE, we offer you gold loans with competitive interest rates and quick loan disbursal. Our flexible repayment options will help you to settle the loan at your convenience. Head to our website www.muthootfincorpone.com to connect with us.