Can You Buy A Commercial Vehicle With A Gold Loan?
Table of Contents
Transportation and logistics is a booming industry in India. With the Indian logistics industry expected to expand further in the next few years, the need for commercial vehicles for day-to-day operations is on the rise. So, purchasing a commercial vehicle for business purposes can turn out to be useful.
Most lending institutions in India offer commercial vehicle loans to fund the purchase of a vehicle that can be used for commercial or business purposes. These loans are available for both new and old vehicles, such as vans and trucks. But what if one chooses to make the best of the already available assets to lessen the burden of the loan?
In India, gold is usually bought for usage as ornaments, but it is also a common form of investment. During financial crunches, these assets can be useful for instant loans. In India, most people pledge their gold with banks or NBFCs to take loans to pay the margin money for buying vehicles and homes.
Gold loans are secured loans that borrowers take from a financial institution against gold jewellery. Both gold loan and commercial vehicle loan have their own set of advantages and disadvantages. Here are a few considerations which borrowers must evaluate and compare before deciding the loan type:
Interest Rate
The interest rate of commercial vehicle loans varies from lender to lender, but also depends on the profile of a borrower. The interest rate may be higher in case the borrower has a low credit score. To get a commercial vehicle loan at a lower rate of interest, borrowers can apply with a guarantor or co-applicant having a satisfactory credit score and financial profile. But if none of these seems practical for a borrower they may opt for gold loans. A gold loan does not require a good credit score as it is a secured loan.
Loan Tenor
The repayment tenure offered in commercial vehicle loans is up to five years. Compared to these, gold loans have a shorter tenor. So, those who want to free themselves from the cycle of the debt burden in minimum possible time can opt for gold loans.
Loan Amount
In the case of gold loans banks and NBFCs offer loans only on 75% of the gold’s market value. So, those who need a higher loan amount should consider a commercial vehicle loan.
Get Gold Loan at the comfort of your homeApply Now
Additionally, vehicle loans require more documentation as compared to gold loans. Some of the other advantages of a gold loan are as follows:
Interest Rate
A gold loan is a secured loan. As a result, the interest rate is low as compared to other unsecured loans. The interest rate also depends on factors like the loan amount, gold loan tenor and the quality of the gold given by the borrower as collateral. To some extent the gold loan scheme chosen by the borrower also affects the interest rate.
Flexible Purposes
Like personal loans, there are no restrictions on the end-usage of gold loans. Thus, the funds can be used for a family vacation, wedding, medical emergency, buying a luxurious home decor and even for buying a commercial vehicle for business purposes. Banks are not concerned about how and for what purpose the loan amount is being used.
Likewise, there is no restriction on the type of commercial vehicle one buys. So, borrowers can use the money to buy a passenger vehicle or for purchasing a vehicle for moving goods or freight.
Eligibility Criteria
Most banks offering gold loan schemes do not have stringent requirements because it is based on the value of the gold that the borrower pledges as collateral.
Conclusion
A gold loan is a practical way to raise funds that can help to invest in commercial vehicles. Not only does it require fewer documents as compared to a vehicle loan, but it also has smooth and easy loan approval process.
IIFL Finance offers doorstep loan facility for borrowers, helping them to avail gold loans right from the comfort of their homes. The loan application process is customer-oriented involving unique features that give the best value of your gold. So, you can fulfil your dream of buying a commercial vehicle with IIFL Finance gold loan easily and quickly.
Get Gold Loan at the comfort of your homeApply Now
Frequently Asked Questions
Lenders do not restrict how the loan amount should be utilized, so it is possible to buy a commercial vehicle with a gold loan. Gold loans offer a convenient financing option with minimal paperwork, straightforward eligibility criteria, competitive interest rates and tenures, and expedited loan approval.
No, there are no particular limitations on the usage of the loan amount for gold. The money can be used for company or personal expenses, such as buying commercial cars. Borrowers may easily handle a variety of financial demands because of this flexibility. Gold loans provide a workable option while providing you a clarity that the gold pledged is safeguarded and that the right procedures are followed.
The sort of car that may be acquired with gold loan cash is not restricted by the lender, thus the answer is yes. Borrowers are free to utilise the money anyway they see fit because the loan is backed by gold. Borrowers may easily obtain borrowed funds with minimal documentation and quick disbursal process, all while making sure the gold pledged is adequately secured for the duration of the loan.
Funds from a gold loan can be used to buy a variety of commercial vehicles, such as cargo carriers, trucks, vans, and passenger transport vehicles. Borrowers are free to select cars according to their operational requirements because lenders do not impose restrictions on the final usage.
The weight, purity, and present market value of the pledged gold determine the potential loan amount. A portion of the gold's worth is usually offered by lenders, giving borrowers access to the maximum worth for gold of up to 75% LTV. Borrowers may get appropriate financing for buying commercial cars with attractive interest rates and quick loan approval. The final loan amount is established following a thorough assessment and verification of the gold.
Disclaimer : The information in this blog is for general purposes only and may change without notice. It does not constitute legal, tax, or financial advice. Readers should seek professional guidance and make decisions at their own discretion. IIFL Finance is not liable for any reliance on this content. Read more
