We all come across certain situations where we face financial problems, and emergencies happen all the time. These crises burge us to take on loans and deal with the situation immediately where one can get out of the current situation and then bring the financial health on track.
Here, a person can face situations like a medical emergency or the business is going through a certain form of crisis, and to prevent that, one needs to look into some forms of loan which an individual can take by keeping some of the existing assets in mortgage and deal with the situation and again retrieving the asset after making full payment.
In this blog, we will look into some of the pros and cons of both types of loans and will state the conditions based on which one can decide which type of loan is best suited for them.
Understanding Gold Loan
When it comes to gold loans, it’s considered one of the secure formats of loans where one can pledge the item and get the required amount. Here, the final amount depends on the collateral you are submitting, and on that, one can claim the loan amount.
The gold is measured in the per gram rates and is marked at the current price of gold on that date. In this kind of loan, one doesn’t need credit score backing or other income documents, as the item itself works as a guarantor and is best suited for short-term needs.
One can consult through a DSA partner app and know the lender that is offering the lower interest rate, and based on the need of the individual, one can find the right lender through the use of a DSA.
Defining Loan Against Property
Another kind of loan is a loan against property, where a person will offer land, a house, or a car, which substitutes the loan amount. It works as a pledge, which the bank will again give back to the borrower when the loan amount is returned.
Unlike the gold loans here, the lender will verify the asset and find its price, and thus it requires lists of documents which a person can use for registration and keeping the asset with the lender.
However, the benefit of a loan against a property is that it allows an individual to have a higher tenure of loan repayment and the amount one can get is much higher in this kind of loan.
Parameters That Need to be Checked
Certain parameters are there that need to be checked and verified before choosing the type of loan you must go for and the amount you need to meet the emergency.
- Tenure of the Loan
The loan tenure in gold is given in large terms, around 1 to 2 years. As the loan ticket size is much smaller and therefore the tenure mostly ranges in this time frame. The next aspect is the loan against property, and here, the loan tenure is much larger, and term loans are also provided.
- The Need for Documentation
The need for documentation is paramount when it comes to loans against property, and through that, one can get the right loan amount through the mortgage. However, in gold loans, the documentation process is much less and, therefore, needs less documentation to get the loan.
- Loan Processing Time
The need for loan processing time is also required for both these types of loans and here, the champion is the gold loan. If the items are properly shown to the lenders and the borrower completes the minimum documentation requirement, then in that case the loan can get processed within 30 minutes.
However, for the loan against property, the time required is much higher, as the lender needs to check the authenticity and then can only receive the amount.
- Interest Rate Variation
Some DSAs can guide a person better on the type of rates one can get from these loans. Here, one can check DSA’s full form, which is Direct Selling Agent, and they can state which loan is best depending on your situation.
As per the general standard, the interest rates are a bit higher on gold loans as they comprise of shorter period.
Hence, by checking this criterion, one can check which loan is based suited for you depending on the total amount one needs to handle a situation.
More Stories
Highlighting the Roof Condition When I Sell My Car Online in Tuscaloosa, AL
Gold Surges Past $2,670 on China’s Stimulus and Geopolitical Tensions