Is my credit score needed for a gold loan?

Is my credit score needed for a gold loan?

The loan facilities are given by financial institutions (banks and non-banking financial companies). A loan is where the lender will provide a sum of money to borrowing individual or entity against security or very often without any security.  A credit option provided with collateral (an asset used to avail of funds) is known as secured loans and the ones without any collateral are known as unsecured loans. As the name suggests, an unsecured credit facility is not backed by any asset.  Without anything upholding and assuring the lender, the risk of the lender will be high in this case. It will lead to a higher cost of obtaining funds as compared to the secured loans. 


When it is about a secured credit facility, the lending institute (banks and non-banking financial companies) have a lower risk element involved here. Thus, the charges levied here by the lending institution will be meagre. Due to this reason, the borrowing individuals or entities are more comfortable taking this form of credit if monetary assistance is needed at the earliest. At the same time, the lenders are also willing and more than happy to grant a borrower with funds through a  secured credit facility. A gold loan is a type of secured loan strengthened and supported by gold objects as collateral. A borrower can quickly go to the financial organisations (banks and non-banking financial companies) and pledge their precious and valuable assets to get money against it. The documentation is minimal, and the process is short for these facilities. 


As soon as the borrower repays the entire amount borrowed, they will become the rightful owner of their precious yellow metal again. The cost of this facility and mainly the gold loan interest rate is within reach of the individual or entity.  The ownership of the collateral will be transferred to the lender in case of defaults. The lender can have the claim over the yellow metal, and they can auction it to recover the penalties and the dues of the borrower. If the borrowing individual or entity is ready to take this advance, then they can access the details if they need through the web. For instance, Pallavan Grama Bank's Gold loan policy specifications will be openly available for all by the online platform. The prerequisites from the financial organisation (banks and non-banking financial companies) are basic as discussed before are the documents required are the KYC documents with a duly signed application form. Besides this, the eligibility criteria that is a vital part of an unsecured loan has lesser influence in this credit form. 


The age, income, employment status, and credit score are the elements of eligibility criteria. The gold loan has a straightforward requirement of age, and that is a borrower must be a minimum of 21 years of age with a steady and constant source of monthly income. The credit score that reflects the creditworthiness of the borrower is not of much significance when it comes to a gold loan. Gold is a highly liquid and precious metal. It is equivalent to having cash. It can be the reason why the lenders don't pay a lot of attention towards these details about the borrowing individual or entity. 


The credit score is essential in general but not a matter of concern in this advance. As a matter of fact, taking this advance can harm the credit score if the payments of the amount are not made promptly and regularly as per the specified terms. Whether a borrower has a credit score or not, if he/she has a credit score, but it is low, these points are not taken into account while grating a gold loan. The lender wants the collateral to be as per their standards, and that's all the borrowing individual or entity has to keep in mind.


Author Bio: Mr Rahul Grover has specialised in the field of banking and finance. He has been a part of this sector for a long time now. Mr Rahul Grover has written many articles to enlighten people with the required information about Pallavan Grama Bank Gold Loan. His work aims to inform and provide clarity to the readers about the intricate and critical details, and the benefits of the Gold Loan Interest Rate, and other types of loans from different banks and non-banking financial companies.


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