Indians have an undying love for gold ornaments, jewellery and coins. It has a very significant role in carrying luck in Indian households. But apart from that, Indians use gold to get immediate funds in times of need. You can apply for a gold loan against gold to meet fund requirements for weddings, medical expenses, child's education, start-up, pay back a debt, etc.
Gold loans are the best option if you want to get an accessible fund in a short amount of time. It is the safest investment option for getting an excellent value for your gold ornament.
There are a lot of benefits to applying for a gold loan. Some of them are listed below:-
- Processing:- As a gold loan is a secured loan, you give your gold against the loan amount. So here, the gold will act as a security, so banks usually dispersed these types of loans very quickly. The documentation process is not very lengthy. You just have to fill a small application form and attach some documents like an Aadhar card, pan card or passport for the verification process. You don't have to wait for a long time to get your documents verified, banks only take a few minutes to settle all the paperwork, and once it's done, they credit the loan amount to your bank account.
- Interest Rate:- The interest rate for the gold loan is comparatively less than personal loans. The range is usually between 7% to 13% p.a. you save a lot of money here because the Gold Loan Interest Rate is low. Some banks allow you to pledge any other asset that you have as collateral, it will definitely help you decrease your interest rate even more.
- Repayment options:- Banks give flexible repayment options to the customers. There are some unique options like 'interest only' where you just pay the interest rate that occurs every month, and you pay the whole principal amount at the end of the tenure. There are many other options like this available. The tenure usually ranges from 12-48 months, but you can extend it if you have some financial constraints. It is generally recommended to choose a shorter tenure for a gold loan because you might end up paying more interest than your loan amount.
- Processing fee:- Most banks like Corporation Bank gold loan or State Bank of India gold loan don't usually charge a processing fee for gold, but if they do, it's generally 1% of your loan amount, which is very affordable and less expensive. But many banks and Non-Banking Financial Companies don't ask you to pay any processing fee because the process of gold loaning is quicker, and they have your gold as collateral.
- Income proof:- Unlike a personal loan, you don't have to submit any income proof to show that you're eligible for this loan. This feature makes a gold loan attractive because it allows everyone from an employed salaried person to an unemployed housewife to apply for this loan.
- Credit Score:- If you have a low or bad credit score, then your application for any other loan can be rejected, or you'll have to pay a high-interest rate to avail of that loan. But that's not the case for a gold loan, and here you don't have to show your credit score to avail of this loan. You can get a gold loan at a low interest rate even if your credit score is low.
- Anytime liquidity:- You can get this loan anytime, and the bank will just need 5-15 minutes to complete the whole procedure. So you can quickly get cash against your gold anytime and within just a few minutes.
- Flexibility:- You can use the money you get from a gold loan anytime and anywhere. Unlike car loans and house loans, you don't have to use them for one particular situation particularly. You can use it for different purposes simultaneously, and you are not reasonable to anyone about your expenses. This gives you complete flexibility over the money you get from a gold loan so that you can use it for different purposes like wedding, medical expenses, vacation, debts, buying an asset or for a child's education.
Conclusion: There are a lot of advantages to applying for a gold loan. And you can apply for a gold loan anytime you want. The basic requirement is pure gold. But you'll have to be careful while paying the instalments because if you fail to pay the loan amount or the instalments, then the bank will seize your gold and sell it to cover up the loan and the interest amount.
