Last Updated on 9 months by admin
One doesn’t have to say that gold is an integral part of most weddings and even occasions in India. Some people have been accumulating it as a financial security meant to be liquidated and used in financial trouble times. Over the years, from being used as a latent asset in a locker, it has emerged as a valuable asset that one can raise funds to fulfil emergency and non-emergency needs by keeping it with a financial institution as collateral without having to sell it. This sort of arrangement is called gold loan which is a secured loan obtained from a borrower by pledging their gold to the lender. In return, the borrower is required to pay the gold loan interest rate over a selected period of time that will be based on several factors. After the borrower has paid back the borrowed money, their gold jewellery will be returned to them.
The process is quick and simple: A gold loan is quick and easy to obtain because it is a secured kind of loan that requires minimum verification. Gold loans are a convenient choice for those with no credit history and CIBIL score. All one needs is identification and address paperwork, such as a PAN card or an Aadhaar card.
Helps to monetize unused gold jewellery: Physical gold stored as a latent asset in a locker or at home generates no interest income. As a result, a gold loan is an excellent way for individuals and families to monetise their gold and utilise it to meet short-term demands or in an emergency.
No credit history is required: The borrower’s credit history is not necessary as long as the quality of the gold has been determined by the lender. A borrower with a bad credit history and a low CIBIL score can still get a gold loan. Gold lending firms do not consider a potential borrower’s previous obligations when disbursing a loan because they already have gold jewellery as collateral, which they have the assurance of if the borrower does not repay the principal and loan amount on time.
Can help you fetch higher value loans: As we all know that the gold has a high market value, and reputed lenders offer loans as high as 2 crores against 22-karat gold jewellery.
Multiple Repayment Options: Gold loans are simple to repay because lenders provide borrowers with the option of making payments monthly, bimonthly, quarterly, semi-annually, or annually. Furthermore, unlike the majority of other loans, gold loan have a repayment option that requires simply interest and no EMI. The principal may be repaid at the end of the loan term.
Can help you fund emergency medical needs: If you have an unexpected medical emergency and require immediate funds for hospitalisation, testing, or medications, an online gold loan can come in helpful. While emergency personal loans for medical needs are available, they are frequently more expensive and take longer to be approved. Gold loan processing normally takes between 24 and 48 hours.
There is no prepayment penalty or foreclosure cost: For gold loan, reputable NBFCs and banks impose minimal or no foreclosure fees. Repaying a portion of the loan in advance or paying the entire amount without penalty minimises the overall loan servicing expenditure.
Simple Repayment Options: Borrowers with a gold loan have the freedom to make interest and principal payments as needed. For example, under some gold loan arrangements, borrowers can first pay only interest and then make up the difference at the end of the loan term. They do, however, have the option of paying the entire amount at once.
Increased loan-to-value: People in medical emergencies require immediate access to funds in order to receive prompt treatment. Obtaining a large sum of money at the last minute is difficult. It may even raise the cost of a loan. Using idle gold to raise funds is undeniably easier. They also have a high loan-to-value ratio (LTV).
Can be used for a business, Startup, or Small Business: Gold loans are suitable for people in need of an emergency business loan. Sometimes you have a great concept for a business but don’t have the finances to get it started. This is frequently the case with female entrepreneurs who have the ability to start a business at home but lack the funding. A gold loan, on the other hand, can assist finance any form of business, large or little. Whether it’s a grocery store, salon, boutique, or gym, used car dealership, or cafe. Given the high LTV and low gold loan interest rate, the options are limitless.
Reduced interest rates: Given the nature of the gold loan that is secured, gold loan interest rate are often lower than those of other sorts of loans, such as personal loans, business loans, corporate loans, and so on. Borrowers may be tempted by lower gold loan interest rate in the event of a crisis. As a result, the total payment amount is reduced, allowing for more efficient debt management.
Comes with no-end usage factor: Sometimes your financial demand does not fit into a clear goal like the ones listed above. A home item, such as an air conditioner, may have failed, or you may need to repaint the walls. Perhaps you stumble across a once-in-a-lifetime travel chance but lack the necessary finances. While selling an asset or investment to meet these demands may seem counterintuitive, a gold loan can be a clever and economical approach to meet them.
So we are saying,
Gold loan is a perfect option for those who want to avail loan at a reasonable gold loan interest rate and doesn’t want to sell their gold jewellery in order to fulfil their monetary needs. Unlike other loan options where the amount of loan granted to you will be based on your CIBIL score, the amount of gold loan sanctioned to you will be based on the gold rate per gram you are pledging. Given the fact that it is a secured loan, it requires minimal documentation making a gold loan one of the fastest and easiest ways to secure funds. There is, nevertheless, a sizable unregulated gold loan business that includes neighbourhood lenders and pawn shops. As a result, when looking for a gold loan, one should be cautious and avoid local moneylenders in favour of a reputable and well-known lender.
