Which is most beneficial for you among gold loan, personal loan and credit card loan?
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A bank or a NBFC would extend a loan facility in the event of an unexpected monetary requirement or for a large purchase. A personal loan is the most common option for most people. Other possibilities include gold loans, credit card loans, or loans against mutual funds. Each of these loans has specific benefits and drawbacks. The real question is, what is the most beneficial loan for you?
Personal Loan
The growing popularity of personal loans can be attributed to a few factors, the most important being the absence of the need to pledge collateral with a bank or NBFC. The funds from a personal loan are also directly credited to the borrower’s bank account within a matter of a few minutes and is usually repaid within a span of 1 to 2 years. The downside of a personal loan is the exorbitant interest rate chargeed to the borrower. The process of loan application and approval is fully online, meaning the borrower can remain at the comfort of their home to complete all requirements.
Loan against credit card
Every wallet now contains credit cards that can easily be issued and have an attached cash limit that can be drawn upon and spent. At times Financial Institutions and NBFCs have special credit card loan schemes and personalized marketing strategies which offer them pre-approved credit cards with. These institutions use sophisticated systems which evaluate the users criterias and these include repayment history, utilization and credit scores. The recipients of the credit cards are also credit card cash loans which are along the same queues and do not require them to undertake extensive paperwork. The client’s information is already within the systems used. Also the Net Interest Margins on credit card loans are almost similar to the other category of loans which are the personal loans. The presiding set of guidelines also do not require the client to furnish any assets which are to be used as collateral to the Financial Institution or NBFC.
Gold Loan
In terms of financial emergencies, gold loans have seen a surge in popularity. These loans are part of secured loans. Therefore, for banks or NBFCs, there is minimal risk in extending gold loans. Clients obtain loans by pawning their gold jewelry to a bank or a gold loan corporation. Loan customers have their gold returned to them once they are able to fully repay the loan. In the past year, the price of gold has risen by 42 percent. Therefore, as the price of gold rises, the amount of the loan available to borrowers increases. This is the case since banks and NBFCs are willing to loan up to 75 percent of the gold's market value. Interest for gold loans are lower than those of personal loans and credit card loans.
Loan Against Mutual Funds
Banks and NBFCs make available loans against mutual fund units. You can borrow 50-70% of mutual fund value. The best part is the interest rate of the loan is lower than personal loan and credit card loan. This secured loan is also less risky to the bank or NBFC. The interest rate on loans against mutual funds ranges from 8-15%. One thing to remember is if the NAV of your mutual fund units declines markedly, the bank or NBFC could make a part repayment demand on the loan.
All of these questions are tailored for your needs.
According to the experts, you have to analyze the above loans deeply to determine which one is the most beneficial. It depends on the amount of loan you require, the tenure of the loan, the rate of interest you are most comfortable paying. Many are averse to the idea of having to pledge collateral like property or gold to a banks or a NBFC loans. For these people, a personal loan or credit loan is very useful. The interest rates are always higher but, your bank will give you loans for a lower interest rate if your credit score is very high. Second, external funding of a gold loan is also a good option if you want to avail a higher loan amount. Banks and NBFCs charge lower interest rates on high gold loans. Loans against mutual fund units of these banks and NBFCs are also beneficial. But, you must be cautious and read carefully the terms and regulations of the bank or NBFC before availing the loan.
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