The complex world of credit instruments has long compounded the problem of inaccessibility, but the lending landscape appears to be changing. The growth of India’s fintech industry is transforming access to credit for millions by simplifying the application process, reducing approval times, and making the system transparent. It has provided new opportunities to Indians to meet their financial needs in a convenient manner.
Over the years, gold loans have emerged as a viable option for many, such as for major purchases, or to sponsor family trips during the festive season. In India’s current digital economy, financial technology companies or fintechs are playing a key role in growing the market for gold loans with automated processes, quick approvals and minimal documentation. Considering the costlier EMIs that come with personal loans in the current paradigm, gold loans have proved to be a better alternative to personal loans. Here, we take a look at some of the features of gold loan that make it a preferred option for millions of people:
1. Eligibility Criteria simplified
Eligibility has long been a concern for many people while applying for a loan. In case of gold loan, the process is quite simple, as anyone above the age of 18 years can avail the loan without the need for a borrowing history or a CIBIL score up to a certain limit. Loans are given against gold kept as collateral, and people from all walks of life, be it a housewife, college student, business professional, or anyone can be eligible for it.
2. Quick Processing & Timely Disbursement
The advent of advanced digital technologies has drastically changed the waiting period to access credit, and many fintech companies leverage a speedy processing mechanism to onboard customers and provide a seamless experience for borrowers. Gold loan simplified, made more accessible and is one of the safest financing options available today.
3. Incredible loan-to-value ratio
In 2020, the Reserve Bank of India issued a circular to relax the gold loan LTV ratio from 75% to 90%, providing an attractive option to borrowers to get higher value for their gold jewellery. It can be difficult to access a large sum of money in an emergency, but gold loans offer it in a short span of time and such urgent needs can be met from the comfort of your home. Whether it is for medical emergencies, or even funding a child’s education, gold loans can be a convenient and cost-effective option.
4. Affordable interest rates
Unsecured loans, such as personal loans, come with higher interest rates. Recent developments in the global economy have seen several interest rate hikes, making interest payments a costly affair. For Gold Loan, the interest rate is quite low, as low as 8.5% per annum. Rising gold prices in the markets also enable borrowers to benefit from a reduction in the interest they pay, and hence, gold loans provide an opportunity to individuals to manage their finances better.
5. Ease of repayment
One of the major attractions of Gold Loan is the flexibility with which one can repay the loan. Gold loans come with flexible repayment options, where borrowers can choose to pay only the interest initially, and the remaining amount at the end of the loan tenure. Banking institutions and gold loan companies also do not charge foreclosure penalties, which makes gold loans even more attractive.
Gold loans are thus a reliable option for people to opt for at the time of an emergency, for sponsoring a holiday, or for a major purchase. Out of the plethora of loan options available today, Gold Loan is a secure, highly convenient and beneficial option for the people.
Author: VAjay MalhotraCo-Founder & Chief Sales Officer, Sahibandhu
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