How gold loan can reduce risk of loss

What is a gold loan?

Gold loan is often called a secured loan, it is always at a lower interest rate than the other loan options, because of lower interest rate, the repayment amount is low, therefore there’s a less burden on the borrower. This is the reason why people choose a gold loan over others. Based on the current market value and the current market value and the quality of gold, the gold amount offered in a proportion of gold, usually up to 80%. Gold loans are short-term loans that might last anywhere between a month to a few years to repay. This form of loan may be a smart alternative if you need money for an immediate need and expect to be able to repay it within a short period of time. 

Why choose a gold loan ?

Gold loans provide a lot of advantages such as a lower interest rate. Having lower interest rates than personal loans as they're a relatively low-risk loan for lenders because they are using your gold as security, these process quickly and don't need any proof. Gold loans can be a smart option for consumers who are looking for a loan for a short term , and it also brings the gold to use because keeping it in a bank is better than keeping it in the houses. 

When compared to other loans, gold loans can be granted faster Because the gold is used as a collateral, banks are already at a lower risk of losing money in the event of a loss. As a result, banks are more likely than personal loans to approve your loan quickly, making it a great option during times of need. Manappuram Gold Loan helps the customer to lower the risk of loss by providing some of the policies like: 

How might a gold loan help you lower your risk of losing money? 

Repleading- The number of times the same piece of jewellery, gold coins, or bars can be pledged is limitless. This permits clients to take out multiple loans on the same asset. In contrast to personal loans, which are dispersed based on the customer's ability to repay the loan, gold loans have this feature.

Bullet Payments- The most significant benefit of a gold loan is the ability to pay the loan principal and interest in one lump sum rather than the more common method of repaying other types of loans—equated repayments, or EMIs. This provides with a lot of options or ways to repay which takes the burden off the borrower, thus making it easy and thus loss free. This feature encourages small-business owners and traders who are suffering a severe economic shortage to take out gold loans rather than alternative loan options with monthly EMIs that begin the month after the loan is approved. 

As we've seen, gold companies are effectively securitizing their receivables in the form of short-term gold loans in order to generate liquidity. Securitization is a viable method for generating liquidity in small doses, but it has apparent risks when it becomes the primary source of capital for expansion, Thus decreasing the risk of losing money.

Conclusion- 

Gold loans being one of the most secured loans available with low Gold Loan Interest Rates, reduces the risk of loss for both the lender and the borrower, being in Indian household shows how important gold is for the people so the gold rates generally don’t fall therefore minimizing the risk of losing money.

Also read this: Gold loan for medical emergencies