“Gold and silver is money, everything else is credit.” J.P.Morgan
The iconic statement is by the American financier and investment banker who dominated corporate finance on Wall Street. J.P. Morgan encapsulates his belief in the concrete value of precious metals compared to the more abstract nature of other financial assets. By emphasizing the role of gold and silver as genuine money, he implies their stability and time-tested reliability.
Anyone can face a situation where the available funds or income is not sufficient to cover certain expenses. Such situation can be a medical emergency for self, in-family or it could be expense related to family wedding or for higher studies. Today, there are many credit options available to overcome such short or mid-term crisis including personal loan, credit card loan and gold loan. And many lenders are offering online application to processing that can be completed in minutes if one has relevant KYC documents handy. However, it is very important to have a clear understanding of available credit options. Here’re few points that one must consider before make the decision:
- Immediate fund availability: When there’s an urgency i.e. immediate fund requirement, the quickest and hassle-free form of credit is – gold loan. Unlike a credit card loan comes with a lengthy application, KYC documentation followed by assessment, gold loan needs only valuation of the asset and the fund is disbursed seamlessly. The borrower has to pledge the gold and obtain the funds required. No documentation and credit checks.
- Lower Rate of Interest: The rate of interest on gold loan is generally lower than the interest on gold loan. Gold (jewellery) as collateral gives security to the lenders to offer lesser rate of interest.
- Higher Loan Amount: It is the KYC documentation that decides the loan eligibility in case of credit card or personal loan; whereas for gold loan the value of the asset decides the loan eligibility. So the larger the value of gold, higher is the loan amount too and there’s no limit.
- Low Processing Charges: Gold loans incur least processing fees, hence are always cheaper than other loans. Gold loan do not have pre-payment charges too, thus is more cost effective.
- Hassle-free process: Since gold loan does not require KYC and other documentation, the process is much easier, quick and convenient. Unlike credit card loan or personal loan where KYC and other documentation is much lengthier comparatively.
- Credit score not applicable: Since the borrower is submitting gold as collateral no other documentation is needed. In fact, gold loan is the best option for the borrowers with lower credit score.
- Open purpose loan: The gold loan has no purpose restriction. Suppose the borrower has taken loan for children education and the career plan is changed, the loan fund can be used for any other purpose. This may not be feasible in personal loan.
A gold loan is based on the tangible wealth whereas other loans are derived from the trust and credibility bestowed based on financial systems – and that is the key distinction between a gold loan versus credit card loan. And that is why the gold loan is a better credit form than any other types of loan.
Arvog is a new-age, AI/ML-powered, customer-centric finance company that makes digital lending quick, efficient, and easy. We see worth in in lending wings to people’s aspirations, hopes and dreams. We believe purpose-driven credit can be a true-life enabler. Arvog is here to lend a helping hand, with affordable loans designed specifically for those who need them the most.
Arvog empowers NBFCs and fintechs with the tools and solutions they need to get fast access to credit, thus building more resilient and confident communities
