Gold loans light up Diwali celebrations
Gold not only acts as a hedge to limit losses in the event of an economic downturn and market crash, but it can also be held as a mortgage to avail loans at a cheaper rate. For people facing shortages of funds when shopping for Diwali, a cheaper gold loan would ensure that the celebrations are not clouded for lack of money.
“Since the pandemic, there has been a cloud of uncertainty over economies and livelihoods. The Russo-Ukrainian war was added to it. In these precarious times, it is imperative to secure a cornerstone that provides a sense of security and reliability. Gold has traditionally been this cornerstone for many years, due to its purity and liquidity. As the internet continues to penetrate more into the Indian market, digital gold is becoming a popular investment choice among people, especially young professionals who are more tech and financial savvy than he is. about ten years ago. At the same time, digital loans and demand for loans have also increased,” said Rajesh Shet, CEO and Co-founder of SahiBandhu.
“The gold loan is a kind of secured loan. It can come with a lower interest rate than most other loans. Moreover, the low interest rate, simple eligibility criteria and instant disbursement at home and during the festive season attract many people to opt for gold loans. The digital gold loan application and repayment journey has enhanced the customer journey where anyone can apply online through any channel on any device (mobile, web and a phone call) and make refunds digitally,” he added.
Thus, gold loan acts as a savior for those who want to spend more to brighten up their Diwali celebrations.
“Diwali is known to be a major Indian festival and a celebration of good over evil. While the last two years have been scant in celebrations, this year customers are sparing no effort to celebrate Diwali in a grander way than before. Not only customers, but all e-commerce players, premium brands and online-only local brands are ready to respond to this pent-up demand and have already started their respective sales ahead of Diwali,” said Deepak Singhal, SVP – Business, Rupeek.
“Given the rise in general buying sentiment, demand for credit to meet these needs has also been revived. With the onset of festival season, digital lenders are busy reshaping their offerings to meet this need. Consumers, on the other hand, are spoiled for choice and overwhelmed by the credit options available to them that meet their short-term needs. available, gold loans stand a chance of becoming an unlikely hero considering how they have been digitized and de-stigmatized over the years.Now one can opt for a home equity loan with extremely low interest rates for meet the short-term credit needs of consumers,” he added.
Singhal lists the factors that make gold loans a smart choice over other credit offers:
Simplified process for availing loans
Although there are different types of loans that customers can qualify for, a gold loan is a secured loan that can be easily obtained with just a few KYC documents. It is not necessary to show a credit score or any other document proving your income. For gold loans, financial institutions use the loan-to-value (LTV) ratio to cap the maximum amount based on the value of the security to determine the total amount that can be loaned.
Safety and security through technology
Leveraging new age technology, gold loans can be obtained from the safety of the customer’s home in less than 30 minutes. Through technology-based logistics solutions, home gold loan services are provided by financial institutions across the country. The gold appraisers arrive at the respective clients where the gold quality is appraised and the loan amount is paid into the borrower’s account. While the appraiser secures the deposit of the gold at the nearest bank branch, advanced IoT technology allows the whereabouts of the gold appraiser to be tracked and monitored in real time until the collateral reaches the bank vault safely.
Gold loans can be paid through regular EMIs or bullet payments according to a term chosen by the customer. In addition to the traditional EMI repayment method, technology-backed NBFCs also allow borrowers to pay only their interest each month, leaving the principal component to be repaid on the due date.
“We have already seen clear signs of the spread of gold lending and the first choice of secured credit given the flexibility and convenience it offers. And that day is not far off when all that glitter will be nothing but gold loans,” Singhal said.