Taking out a loan on favorable terms is not an easy task. To obtain an unsecured loan at a lower rate, a borrower must have a clean record and a good credit rating.
Another way to reduce the loan rate is to take out a loan against collateral. However, assessing the value of collateral is also a difficult task.
The ease of obtaining loans also differs from a bank to an NBFC (non-bank financial companies) to fintech players.
“It’s 2022. Everything from groceries to food, consumer durables to blood tests are delivered to homes today. In this sense, does not going to a physical agency to obtain a loan become archaic? asks Nitin Misra, co-founder, indiagold.
Commenting on the grueling task of securing a sanctioned loan, Misra said, “When borrowing from banks/NBFC, the client first withdraws all the gold from his almirah, as he is not sure of the amount. he needs for a loan. As a rule, most clients do not borrow all their gold at once. Once they have located the nearest bank branch, there is always the risk “to carry unsecured collateral. Sometimes customers avoid entering a nearby branch and instead go to a distant branch to avoid being seen or followed.”
“Once the gold is handed over, the branch managers analyze and evaluate the principal and the interest rate. If the assessment is insufficient or if the customer does not accept the offer, he must take back his gold and go again to another bank branch. Due to the inconvenience and privacy issues, they end up agreeing to the unfair offer in most cases. Afterwards, they share their bank details and the money is transferred to their account,” he added.
Apart from the difficult processes, there are also fees involved in the loan sanctioning process.
“Now, depending on the lender, customers may also have to pay a processing fee. There is no possibility of keeping their gold in the lender’s locker without taking out a loan (useful for businessmen). So, every time they need a loan, this tedious process repeats itself. Needless to say, they have to go to the agency again to close the loan,” Misra said.
“On the other hand, borrowing from a FinTech means convenience, security and privacy. In addition, loan documents and loan-related processes can be done on smartphones without the need to visit a branch. In a nutshell, FinTechs are making products more affordable, convenient, usable, accessible and transparent, greatly improving the consumer experience,” he added.