The credit a person gets by pledging their gold to any lending institution with a promise to repay the loan amount is a gold loan. A person having basic KYC document verification can easily get Gold loan to raise funds at times of emergency. There are some facts about gold loans that people pay less attention to but should be determined before applying for the same. Gold loans are known for their low rate of interest but not all gold loans have a low rate of interest as the gold loan interest charged on loan depends on some factors. They are generally the borrower's profile, CIBIL credit score, which is a three digit number that tells whether a person is creditworthy or not and the type of creditor chosen by the borrower.
Another unknown fact about the gold loan is that reputed finance houses guarantee the safety of gold articles pledged with them as the gold articles or jewelries are kept in a vault in a strong room that have robust security arrangements in place. So there are no chances that the gold kept as collateral can be replaced or or get stolen. An interesting fact to add up about gold loans is, ancient or traditional gold articles or jewelries can also be kept as collateral following the issued guidelines by the government regarding the quality of those gold articles to avail a gold loan. According to the guidelines the gold articles or jewelries must be of at least 18 carat of pure gold.
Investors normally choose to buy gold as this expensive metal diversifies the threat, and therefore is one of the most prominent undertakings one has. People who want to progress with the help of some profitable interest through investments should infuse in Gold ETF rather than physical gold as the gold ETF is definitely a better choice. Gold mutual funds have high liquidity and availability and thereby people who want to finance in short term gold should buy gold mutual funds. Investors after finishing fundamental calculations in macroeconomic predicaments evaluate the yearly global gold supply versus its market demand and after that they choose investing in gold.
There are multiple ways attainable by the investors for investing in gold and select the best choice being sure of their budget. Gold investment can be done through- Gold ETF using a Demat account from formal Institutions like INVESCO India Gold ETF, SBI Gold ETF, and Kotak gold ETF; investing in Gold savings fund which is recognized for its organized investment strategy; investing in Gold mining stocks; investing in physical gold, gold ornaments, gold bars and coins; and investing in equity-based Gold funds. If a person does not have adequate reserves to invest in gold then a Gold Loan is a helpful option, where gold ornaments can be pledged to get ample amounts of capital to be utilized for any purpose.
People who want to get a gold loan must know the gold rate of that day and benefits of the loan before applying for the same, and they are :-