Without a question, personal loans are a highly common and useful financial option for everyone. Isn’t one of its most distinctive traits over time its rapid and unrestricted ability to issue loans? However, because personal loans are unsecured, a person’s credit score is a key factor in determining whether or not their application will be accepted. Therefore, the lender has the right to reject your application if they check your IIFL CIBIL score or HDFC CIBIL score before you apply for a personal loan and find that it is low.
If you have enough gold as an asset, it would be prudent to accept a gold loan in these circumstances. One of the most popular ways for households in our nation to invest and save in the past has been with gold. Due to its widespread use, gold tends to be a valuable and sought-after type of currency, which leads to gold loans. If you’re searching for other possibilities after being denied for a personal loan, keep in mind that establishing or improving credit normally takes a few months. The greatest choice if you need money straight away is a gold loan. Here are a few compelling arguments in favour of approval.
Compared to other forms of credit, gold loans likely require the least amount of documentation, making it possible for lenders to disburse them swiftly. Due to the fact that they frequently pay on the same day as loan applications, gold loans are among the fastest types of credit available. One can use online financial marketplaces to compare lenders based on their eligibility requirements and financial requirements rather than taking the time to phone or visit several lenders.
With the loan amount, no restriction on end use
There are no restrictions on how gold loans can be utilised, unlike more conventional lending options like personal loans and top-up mortgages. The proceeds of a gold loan may be used for any purpose the borrower thinks appropriate, such as a wedding, child’s college expenses, or an immediate medical need. This is done to ensure that the lender won’t place any restrictions on how you can use the money. Due to their similarities, personal loans and gold loans can be substituted for one another, but only for those who own enough gold to use it as collateral in the event of a serious financial emergency.
Reduced importance of IIFL CIBIL score
When applying for gold loans, there is little to no need to worry about raising your credit score. Due to the full insurance provided by the gold used as collateral for gold loans, lenders typically give the applicant’s credit history just a minimal amount of consideration. It makes it an appealing loan option for borrowers with bad credit or no credit, who could find it challenging to get other loans due to the significance of credit score in determining loan eligibility and even lending rates. In order to weigh the associated risk based on the applicant’s history of payback, the lender may give the applicant’s HDFC CIBIL score more weight if the loan amount is on the higher side. You would then need to take the required actions to raise your credit score, such as checking your credit report on a regular basis, maintaining a healthy balance of secured and unsecured debt, never skipping a payment on a loan EMI or credit card bill, never using more than 30% of any one credit card’s total available limit, etc. All of this raises your IIFL CIBIL score, which raises your chances of getting a loan authorised.
There are many alternatives for repayment.
Loans with gold as collateral also fully ignore credit checks and have other benefits. Some gold loan providers offer more flexible repayment choices in addition to the conventional EMI option, which calls for the borrower to make monthly principal and interest installments on the loan. Borrowers who choose the individual repayment option are only required to pay interest up until the loan’s maturity date.
Another method of repayment is to pay out the entire loan’s interest at the moment it is approved and the remaining principle when it matures. The option of “bullet repayment,” which enables borrowers to pay off the full loan total at once, including the principal and interest, is also offered by some lenders to their clients.
The optimum repayment method must take the borrower’s cash flow needs into account. For those who are having financial difficulties and need emergency funds, solutions like the non-regular EMI payback capacity of bullet repayment of golds may be useful. For instance, many people’s income has suffered as a result of the current covid outbreak.
A person can still choose the standard EMI option if they continue to have a reliable income and strong credit, as demonstrated by HDFC CIBIL score check. This is because, compared to other debt-repayment options, paying off the principle balance in full during the loan’s term results in lower interest rates.
Instead of selling the asset, use it as leverage.
By applying for a gold loan and using your gold as collateral rather than selling it to settle obligations, you can leverage an asset. You should avoid selling the gold for profit despite your efforts to improve your HDFC CIBIL score because doing so will result in you losing custody of the item. Once the debt has been settled, send the returned item to the lender by mail.
Also bear in mind that a personal loan can be a better choice if you don’t have enough gold but have good credit, consistent income, and a need for a longer payback period than what is offered by gold loans. You learned your IIFL CIBIL score when you asked for a CIBIL score check. Before choosing to submit an application for the choice that best meets your financial situation, compare the two options in light of the numerous previously mentioned considerations.