InvestorQ : Should I take a gold loan from a bank or a non-banking finance company (NBFC)?
Suresh Patil made post

Should I take a gold loan from a bank or a non-banking finance company (NBFC)?

user profile image
Ashok Patkar answered.
2 years ago

Banks and non-banking finance companies (NBFC) both offer gold loans in India and both these categories of lenders have some reputed names among them.

So, it is quite likely that a customer may not be able to choose between the two when he/she goes to get a gold loan.

But the best way to arrive at the decision is to check all the options that are available and bear in mind the following points:

•Rate of interest: Banks win over NBFCs in this criteria as the rate of interest that they charge is comparatively lower. The reason for this is that banks can raise funds at relatively lower rates than NBFCs.

•Flexibility of repayment: If banks win Round 1 of this contest, NBFCs score over them with respect to the flexibility they provide in order to repay the gold loans. An NBFC borrower will allow you to repay your principal amount in a lump sum at the end of the loan tenure while paying only the interest amount monthly during the tenure of your loan.

•Loan disbursal time:

This is the time taken to disburse the loan, which is very less in case of gold loans. NBFCs can give you a loan in just five minutes while banks can take up to four hours to give you a gold loan.

•Pre-payment penalty: If you pay off your loan entirely or even in parts before the due date, then you stand to attract a pre-payment penalty charge from a bank. However, NBFCs do not charge you any pre-payment penalty charge.