Dialabank: CIBIL Score And Gold Loans

Authorized financial lenders like banks and Non-Banking Financial Companies(NBFCs) provide many types of loans to customers in want and need of money. They function all year round and are provided all over the world with exceptional features. The loans provided can be classified as secured and unsecured loans.

The collateral requirement and non-requirement differ from one form to another. Gold loans are secured loans and require collateral, whereas unsecured loans like personal loans don’t. The features of the secured and unsecured loans vary accordingly. A gold loan amount is sanctioned for a certain period and should be paid off with interest by the end of the tenure in full. Gold loans can be availed in both online and offline modes. Either mode is convenient and straightforward. It is the applicant’s choice in opting for the way of applying.

CIBIL score or credit score

Credit Information Bureau (India) Limited (CIBIL) is a credit company that maintains records of individuals, cooperation's, societies, trustees, and other banking customers. The record has personal information, banking information, employment information, and past credits( loans or debts previously acquired from banks and NBFCs). The report is summarized by a three-digit score that varies, usually from 300 to 900. A score above 700 is considered good, and one below 600 is considered poor. This score is essential for availing of most loans and especially ones like unsecured loans.

Gold loans and credit score

CIBIL score or credit score depicts the repayment capacity of the applicant. And depending on the score, the banks and NBFCs grant loans to customers, but a gold loan does not require a credit score. Every loan requires a specific criterion that needs an applicant to meet, and a CIBIL score is demanded in most, but as a gold loan is secured, the credit score is unnecessary. The main factor that makes a credit score unwanted in a gold loan compared to other secured loans is that the collateral of a gold loan remains in the hands of the lender till the complete repayment.
Therefore, banks and NBFCs tend to trust gold loans more and better. And the features of a gold loan are also exemplary because of that reason. The Gold Loan Interest Rate starts from 7% per annum with a minimum tenure of 3 months and a maximum tenure of 36 months. The LTV ratio is up to 90% of the pledged gold’s value. And the documentation requirement of a gold loan is also minimum. An applicant of legal age with an authorized ID proof and valid collateral can avail of a gold loan in several hours. The disbursal of the loan amount is rapid, which makes it perfect to avail during emergencies. Influence of a CIBIL score over a gold loan
Although a CIBIL doesn’t affect a gold loan’s approval process, a gold loan influences credit score immensely. The CIBIL score, as mentioned earlier, is the repayment capacity of the loan, and the score’s value increases or decreases depending on the borrower’s monthly installment payment and principal repayment. And as the score is necessary to avail of other loans, maintaining a good score is mandatory. In addition to lowering your credit score, monthly installment default gives a penalty if the payment is missed for more than one month, and the bank or NBFC can auction the pledged gold if, succeeding, three monthly payments are missed. However, if you pay the EMIs on time, then the CIBIL score increases, and the borrower can maintain a healthy relationship with the bank or the financial institute.

Conclusion

IIFL Gold loan is an eminent gold loan with favorable features and a million customers. The NBFC provides both online and offline services. The gold loan in this financial institute provides a loan amount up to Rs 1 crore with a minimum interest rate of 7% per annum. The gold loan rate per gram varies from Rs 3,506 and Rs 4,621.