Looking for Gold Loan from a Digital Lender? Consider these Aspects First
With more NBFCs extending gold loan services through digital platforms, taking out funds against gold jewellery has never been easier.
The convenience, coupled with ease of accessing small and big-ticket loans online further pushed the popularity of digital lenders in the borrowing segment during the lockdown phase. Regardless, several things must be considered before you decide to take out a digital gold loan.
Here, we have narrowed down the factors that you need to weigh in when opting for a gold loan from a digital lender.
Top Aspects to Consider Before Choosing a Digital Lender
Weigh in these aspects to ensure a smooth and hassle-free borrowing experience online:
1. Check the lender's credibility
As an intending borrower, make it a point to research and verify the credibility of the lending platform thoroughly. This will ensure the safety of your collateralised asset and prevent getting duped by unregulated lenders who impose fraudulent terms and charges.
One of the easiest ways to check and confirm credibility is by finding out whether the lender is registered with the RBI or is an associate partner of a verified lending institution. You may also gain a significant idea about the website by simply checking out customer reviews and testimonials about the digital lender.
2. Interest rates
The interest rate levied by a digital lender is among the crucial things to find out before taking out a gold loan through them. Make sure you are in the loop with the latest gold loan trends and prevailing market rates.
3. Terms and conditions
To ensure a smooth transaction it is vital to check accompanying terms and conditions. Go through the same in detail and if required ask the lender to walk you through the steps for more clarity and better understanding.
Before borrowing, make it a point to find out the type of interest they levy on gold loans and whether they offer any customised repayment structure or not. In case they do, check the terms and conditions accompanying it.
4. Repayment structure and channels of paymentMost NBFCs today extend flexible repayment options to borrowers. As an intending borrower, you must find out about the different payment structures in detail to choose the one that suits your requirements and repayment capability the most.
Borrowers often have the option to choose from among interest-only payment, EMI payout, or bullet payment to clear off their debt.
The USP of most online gold loans is the repayment channels they offer. For instance, SBFC allows gold loan borrowers to repay the borrowed sum through multiple channels such as IMPS, UPI, NEFT, bank deposit, and cash deposit.
5. Transactions made out to registered account
Make it a point to find out if you will be required to make payments under the loan executive's name. It is recommended to stay away from such an arrangement since it might not be safe.
Instead, look for NBFCs who ask you to transact with the official account that is registered under it or its partner platform's name. Ideally, online payments are considered safer as they are easily traceable.
6. Doorstep application process
The USP of digital gold loan is the most crucial part of taking out a loan, i.e., the application process and documentation are carried out entirely online. However, some NBFCs extend a special feature of doorstep gold loan application to keep the process smooth and hassle-free.
For instance, SBFC extends the Gold Genie feature wherein a gold loan executive visits an intending borrower to allow them to apply for the loan from the comfort of their home.
7. Documentation and disbursal
A digital gold loan has minimal documentation requirements. Typically, borrowers who apply for a digital gold loan with SBFC have to submit documents that serve as proof of identity and address to take out funds against their gold ornaments. The simple documentation accelerates the verification process, ensuring prompt disbursal of funds.
8. CRM support
A real time customer service further improves the convenience that accompanies digital gold loans. Often borrowers find reminders about EMI payments and outstanding loans sent via SMS or email helpful as it prevents borrowers from missing out on payment due dates and consequently avoid penalty.
Since almost all processes of taking out a digital gold loan are carried out online, choosing an NBFC that extends prompt CRM support could prove immensely beneficial for a borrower.
9. Gold valuation
Since the amount you can access on a gold loan depends on the valuation of the gold, it is important to find out how a lender chooses to value your precious metal. In most cases, lenders accept gold with a minimum of 18-carat purity to sanction a loan against it.
Also, SBFC chooses to offer 75% of the gold value as loans to applicants. Notably, they choose to offer loans against gold ornaments and not bullions or coins. So, as an intending borrower, make sure to find out about these aspects beforehand to avoid confusion.
10. Prepayment and foreclosure charges
To ensure transparency, you must also make it a point to find out whether you are expected to bear a prepayment and foreclosure charge against your gold loan account or not. While most lenders do not levy these charges, some may require you to pay up to 2% of the borrowed sum as a penalty. Avoid such confusion by reading fine prints carefully.
Besides these, make sure to find out the repayment tenure and processing fee that accompanies your choice of a digital gold loan. Indeed, taking out a gold loan online is convenient; however, the entire experience depends on the lender you choose. This is why it is important to weigh the credibility and expertise of a lending institution before taking out a loan.
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