Why Is Competition Increasing For Gold loan NBFCs?
With the recent pandemic rendering many people jobless, the demand for loans against gold surged. Know the various other factors for increase in competition here!
The Indian culture places a high value on gold. In times of crisis, people depend on it for immediate financial assistance. However, lately, the demand for gold loans has increased significantly, courtesy of the COVID-19 pandemic.All NBFCs are aware of the surge in demand for gold loans. Therefore, they are improving their services to keep up with the increasing competition.
Top Reasons For The Demand For Gold Loans
1. Loss Of EmploymentThe pandemic slowed down business turnover and caused many job losses. At such times, gold loans provided a means of securing one's livelihood. This loan type offers a shorter processing time and lowers interest rates than other secured loan options, helping people fulfil their daily needs.
2. Easily Accessible CapitalPeople apply for gold loans primarily for quick access to funds. Since they are secured loans, it’s less risky for the lenders and easier to obtain for borrowers. You can get low-interest financial assistance with a click by pledging gold as collateral.
3. Investment OpportunitiesIndividuals can get funds to start a business online with a gold loan. This way, their gold enables them to manage their finances independently.
4. Rising Gold PricesAs gold prices rise, so does the amount which one can borrow. Hence, people are more likely to turn to gold loans when they need higher loan amounts.
Features NBFCs Provide To Compete With The Rise In Demand For Gold Loan
• Quick Processing:NBFCs offer gold loans almost instantly to make them more accessible than their competitors. As it is a secured loan, lenders can provide loans with minimal documentation without much risk. If the borrower defaults, the lender can sell the gold.
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• Zero Processing Fees:A significant advantage of gold loans from NBFCs is that the processing charges are minimal.
• No Income Proof:Since gold is collateral, most NBFCs do not require income proof when you apply for a gold loan. All you need is valid KYC documents.
• Lowest Interest Rates:NBFCs offer competitive rates compared to other financial institutions. Some NBFCs have interest rates as low as 7 per cent, giving them a competitive edge.
• Minimal Foreclosure Fees:Many NBFCs do not charge foreclosure charges on gold-backed loans or charge a minimum of 1 per cent, distinguishing them from their competitors.
• Physical Gold Security:Gold loans are safe with NBFCs, which offer gold asset insurance.
Get A Gold Loan With IIFL FinanceGold has proven beneficial for borrowing money when facing financial hardships. IIFL Finance offers various gold loan schemes. You can walk into any of our branches across India, complete the e-KYC process within five minutes, and receive your funds within 30 minutes. You can also get gold loans through IIFL website or app and receive cash within a few hours.
Q1. How do you qualify for a gold loan?
Ans. Gold loans are available to anyone between the ages of 21 and 70 with gold assets to pledge. Unlike other loan types, this loan does not have strict eligibility requirements.
Q2. What is the current gold loan interest rate?
Ans. A wide range of interest rates is available for gold loans. They primarily vary from 7.35% to 29% per year.
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