There aren’t enough funds for everybody to meet all the financial requirements, and at times, a loan or debt is required. Both licensed and unlicensed financial lenders provide these loans. The licensed lenders include banks and Non-Banking Financial Companies(NBFCs), which provide numerous commercial services besides lending loans. The loans are typically divided into secured and unsecured. Unsecured loans do not need collateral(physical assets) to lend money, and secured loans are the ones that require collateral. Personal loans, medical loans are some of the unsecured loans, whereas gold loans, car loans, and home loans are some of the secured loans. To avail of a gold loan, physical gold of any form is required to be pledged by the applicant. The gold is then inspected and based on its value. After that, a loan amount is granted for a certain period(loan term or tenure). The loan amount sanctioned has to be repaid in full with interest by the end of the tenure. The pledged asset is returned back to the borrower after the bank or financial company receives the owed money.
The ever-growing economical growth of the world has brought innumerable technological advancements in every sector of society. And the immense technological advancement in the financial sector and lending loans is the presence of an online mode to procure loans. In addition to the conventional offline face-to-face mode, the banks and NBFCs have introduced the digital manner to avail a gold loan. The processing of the gold loan is speedy, and the loan amount disbursement is done within hours of the gold loan approval.
Advantages of a Gold Loan -
Generally, loans are granted to customers on specific terms and conditions needed to abide by them to have a healthy banking relationship with the lender. Hence, before sanctioning a loan, the bank or financial company demands certain documents like income proof, employment proof, bank account statement, etc.., but a gold loan doesn’t require them because of the collateral demanded. An applicant of legal age(above 18 years) with government-authorized ID proof can take out gold loans conveniently using either mode. A credit score indicates the applicant’s repayment capacity and is extremely necessary to avail of most loans, especially unsecured ones. The non-requirement of a credit score in a gold loan is also another one of its many advantages. The loan amount borrowed from the bank or NBFC can be used for any purpose. Be it for debt consolidation, scientific research purposes, medical emergencies, business expansion or initiation, construction, home renovation, weddings, or educational purposes. The financial provider doesn’t raise questions about the borrower’s choice.
Gold loan features -
A gold loan is a secured kind of loan, and therefore, the loan amount sanctioned is based on the value of the gold pledged. The LTV ratio of the bank or the NBFC decides the loan amount. The maximum loan to value ratio of a gold loan is 90%. Therefore, if the collateral’s value is Rs 1 lakh, then the maximum loan amount a bank or NBFC sanctions is Rs 90 thousand. The value or worth of the pledged gold is evaluated based on its purity and weight of the gold. The minimum and maximum purity required are 18k and 24 k, respectively. Gold of any weight is accepted in most banks and financial companies. The loan amount granted per gram of gold is known as the gold loan per gram, and it starts from Rs3,506. The gold loan tenure varies from 3 months to 3 years with a minimum interest rate of 7% per annum. A gold loan processing and prepayment fee are NIL in most banks and NBFCs, unlike other loans.
SBI is a world-renowned financial provider with millions of customers and branches all over the globe. The gold loan in SBI is equally reputed and favored for its exceptional features. The SBI Gold Loan rate per gram starts from Rs 3,506 like many other lenders.
Also Read This-SBI Multi Purpose Agri Gold Loan Scheme
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