There has been a considerable rise in Gold prices since May 2020. Although the world has taken a setback due to the ongoing crisis, gold is managing to shine brighter with each passing day.
With small businesses, shops and merchants suffering losses for a couple of months, it’s now time for them to pull up their socks and get their businesses back on track. With the government's guidelines of resuming businesses, small scale business and shop owners are turning to gold loan to meet their working capital requirements.
In order to restart, people are turning to loan against gold for funds required for purposes such as procuring raw materials, addressing working capital needs, operational liabilities and others.
As far as other loans are concerned, Financial Institutions now are extra cautious while giving any other loan, due to the current losses in the markets which in turn raises an eye on the repayment capacity of the borrower. In the current situation, gold loan is the safest option now as the borrower has to pledge their gold to get a loan, so Financial Institutions here are at ease while lending. As a matter of fact, the need for other loans comparatively has also decreased. Post the unlock phases there is a significant rise in demand for gold loans arising especially from tier 2 and tier 3 cities as compared to tier 1 cities. This growth in demand is mainly due to people coming from regions which survive on small factories, farming, shops, small businesses etc. Thereby increasing the demand for gold loan in such regions especially.
Due to an increase in Gold prices, another trend being witnessed is that of people selling their gold to take advantage of the rising gold rates which is clearly visible during the COVID19 phase.
Why shine of Gold will still not fade?
- Loan amount: With the application for Gold Loan your chances of getting higher loan amount increases. The simplest reason being that you pledge your Gold as collateral. The maximum limit is upto 1 crore, depending on the gold you pledge. Along with a higher loan amount, you can get a loan against gold with a minimum amount of Rs. 1000. Usually, companies offer LTV of 70-75% on the gold pledged
- Credit History is not required: This is one of the USP of availing a Gold Loan; you do not need to have a credit history or any credit score. Even if your credit score is low, you shall be granted the loan. As the lender can recover the money by selling your gold
- Minimum documentation: Only basic KYC documents are required while taking a loan against gold and there are flexible repayment options. With minimum paperwork, the loans are sanctioned instantly in less than 5 minutes and disbursed within 30 minutes
With the increase in demand for gold loan, Financial Institutions are coming up with attractive plans to lure customers for taking a loan against gold. With demands in tier 2 & tier 3 cities Financial Institutions’ plans and activities are curating towards reaching out to maximum people via digital platforms, online gold loan and doorstep services among others to serve the borrowers.
If you wish to apply for a Gold Loan from Fedfina, click here