Gold loans light up Diwali celebrations | The Financial Express

Gold loans light up Diwali celebrations

Gold not only acts as a hedge to limit the losses at the time of economic downturn and market meltdowns, but it may also be kept as mortgage to avail loans at a cheaper rate.

Gold loans light up Diwali celebrations
For the people facing fund shortages during Diwali shopping, a cheaper gold loan would ensure the celebrations are not dimmed due to the want of money.

Gold not only acts as a hedge to limit the losses at the time of economic downturn and market meltdowns, but it may also be kept as mortgage to avail loans at a cheaper rate. For the people facing fund shortages during Diwali shopping, a cheaper gold loan would ensure the celebrations are not dimmed due to the want of money.

“Ever since the pandemic, there has been a cloud of uncertainty over economies and livelihoods. The Russia-Ukraine war has added to it. In such precarious times, it is imperative to secure a cornerstone that provides a sense of surety and reliability. Gold has traditionally been that cornerstone for many years, owing to its purity and liquidity. As the internet continues to penetrate the Indian market further, digital gold is emerging as a popular investment choice amongst people, especially the young professionals who are more tech- and finance-savvy than people were about a decade ago. With the same, digital lending and loan demand have also increased,” said Rajesh Shet, CEO and CoFounder of SahiBandhu.”

“Gold loan is a kind of secured loan. It can come at a lower interest rate than most other loans. Additionally, the low-interest rate, simple eligibility criteria, and instant disbursement at home and during the festive season attract many people to go for gold loans. The digital journey of applying for and repaying gold loans has enhanced the customer journey where anyone can apply online through any channel across any device (mobile, web, and a phone call) and make the repayments digitally,” he added.

So, gold loan acts as a saviour for those who want to spend extra to brighten their Diwali celebrations.

“Diwali is known to be a major Indian festival and celebration of good over evil. With the last two years being lean in celebrations, this year customers are leaving no stone unturned to celebrate Diwali in a grander way than before. Not just customers, all the e-commerce players, high-end brands, and homegrown online-only brands are geared up to meet this pent-up demand and have already started their respective pre Diwali sales,” said Deepak Singhal, SVP – Business, Rupeek.

“Given the rise in the overall shopping sentiment, credit demand to meet these needs has also been revived. With the festival season starting, digital lenders are busy remodeling their offerings to meet this steep credit need. Consumers on the other hand are spoilt for choice and have been overwhelmed by the credit options available to them that suit their short-term needs. Amongst many credit options that are available, gold loans have a chance to become an unlikely hero given how it has been digitised and de-stigmatised over the years. Now one can now opt for a doorstep loan with mighty low-interest rates to meet consumers’ short-term credit requirements,” he added.

Singhal lists the factors that make gold loans a smart choice compared to other credit offerings:

Simplified Process to Avail Loans

While there are different types of loans that customers can avail of, a gold loan is a secured loan that can be availed easily with just a few KYC documents. There is no need to show a credit score or any other income-proof documents. 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 full amount that can be lent.

Safety and Security Through Technology

Leveraging new-age technology, gold loans can be availed from the safety of the customer’s home in less than 30 minutes. Through tech-enabled logistical solutions, doorstep gold loan services are provided by financial institutions across the country. Gold appraisers arrive at respective customers’ households where the quality of gold is evaluated and the loan amount is disbursed into the borrower’s account. While the appraiser ensures the deposit of gold in the nearest bank branch, advanced IoT technology enables tracking and monitoring of the whereabouts of the gold appraiser in real time until the collateral reaches the bank vault safely.

Repayment Options

Gold Loans can be paid through regular EMIs or bullet payments at a tenure chosen by the customer. In addition to the traditional EMI repayment method, technology-backed NBFCs also allow borrowers only to pay their interest each month, leaving the principal component to be reimbursed at the maturity date.

“We have already witnessed strong signs of gold loans becoming mainstream and the first choice of secured credit given the flexibility and convenience that it offers. And that day is not far when all that glitter will only be gold loans,” said Singhal.

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First published on: 24-10-2022 at 18:04 IST