Why Competition Increasing For Gold loan NBFCs?

Indian culture places a great deal of value on gold. When faced with a crisis, it serves as a source of immediate financial assistance. Since the COVID-19 pandemic, gold loan demand has surged significantly. Gold became a more reliable credit instrument when people faced financial problems.

NBFCs and banks have recognised this surge in gold demand. To make gold loans more convenient for customers, many NBFCs have devised excellent schemes. Getting a gold loan is now possible from the comfort of your home in just a few minutes.

Top Reasons For The Demand For Gold Loans

1. Job Loss

Business turnover slowed down and many people lost their jobs during the pandemic. In such times, gold loans were a solution for supporting one's livelihood. Here, the processing time is shorter, and interest rates are lower than other secured loan options.

2. Investment Opportunities

Those looking to launch an online business can take advantage of the gold loan. This way, their gold allows them to arrange their finances independently.

3. Easy Access To Capital

The main reason people seek gold loans is to access funds quickly. One can get low-interest financial assistance with a click by pledging gold as collateral. As a result, the loan is less risky.

Features NBFCs Provide To Compete With The Rise In Demand For Gold Loan

• Quick Processing:

Many NBFCs offer customers gold loans through API technology. Thus, gold loan applicants can benefit from hassle-free, transparent, and speedy loan disbursement.

• The 'Pay Interest Only' Option:

Gold loans offered by NBFCs include easy repayment options. Paying interest first and the principal amount at maturity is the most popular one. Other repayment options for gold loans include regular EMIs, partial repayment, and bullet repayment.

• Zero Processing Fees:

Many NBFCs do not charge processing fees for gold loans.

• Minimal Foreclosure Fees:

Most NBFCs do not charge foreclosure fees on gold loans, or they charge a minimum of one per cent.

• No Income Proof:

NBFCs do not ask for any income proof when you apply for a gold loan because gold is the collateral. A valid KYC document is all that is needed.

• Lowest Interest Rates:

NBFCs are known for their competitive interest rates over other financial institutions. Thus, if you apply for a gold loan with NBFCs, you'll get the best gold loan interest rates as low as 7%.

• Offer The Best Security Of Physical Gold:

NBFCs offer gold asset insurance and safe custody of gold loans. In case of a business expansion, medical emergency, wedding, or other similar financial necessity, a gold loan offers the most secure financing option. Loans against gold jewellery are a good option if you need quick disbursal and minimal documentation.

FAQs

Q1. What are the eligibility criteria for a gold loan?
Ans. Anyone aged 21 to 70 with gold assets to pledge may qualify for a gold loan. Unlike other types of loans, there are no strict eligibility requirements for this type of loan.

Q2. What is the current gold loan interest rate?
Ans. Gold loan interest rate varies from lender to lender and may range between 7.35% to 29% p.a.