Gold loans are probably the most loved, purchased and earliest gold loan products of all time. Most of the Indian families have Gold in their homes. It's either with them since centuries as it is passed by one generation to another as a symbol of love and appreciation or it's purchased to have a hedge against inflation. Gold is considered as a safe investment because of the stability it maintains with it's prices that would slightly rise or dip and would never go zero because of its limited quantity on Earth. Gold kept at homes is either used for keeping it at rest for years or put to work by taking a loan against it. The second option was much more exercised during the lockdown when most of the people had to suffer salary cuts, loss of jobs, serious illness at home etc.
Here are a few reasons it can be used for:-
Uses-
1) Medical bills: Gold loans can help you when you find yourself stuck in numerous medical bills. Medical bills can be as high as the sky. First, try to bring the amount of bills down and talk to the hospital about it. Try asking for instalments as no interest. If nothing works out, go for a gold loan and get your amount within an hour.
2) Student debt: firstly check if the interest rate of your student loan is higher or lower than the Gold loan you are applying for. If the interest rate on the gold loan is lower,than you can pay off your student loan with a Gold loan
3) Repaying friends or family: If you have to repay someone who extended a helping hand when you needed it the most but now you are unable to pay them back, and you are tired of asking friends and family again and again, a Gold loan might be the perfect solution for you. The better option is obviously to talk to them and make them understand your situation. If you still want to pay it back now and want no further wastage of time, go for a Gold Loan. But remember, you'd end up paying extra in this case.
4) Vehicle financing: Try for an auto loan first. If it costs you more, go for a Gold loan. But remember since gold loans are short term loans, you'd have to pay them back in one year in most cases. Use Gold Loan Interest Rate Calculator for accurate and fast computations relating to gold loans.
5) Vacation: people usually take personal loans to finance their travelling, mostly because it doesn't have any bar to its usage and its long term loan. It gives you the time to repay in lower EMI's but their interest is quite high. If you have enough Gold, that by pledging it you would be able to finance your vacation, go for it.
6) Essential home repairs: Obtaining a Gold Loan to fix something essential in your home is logical and sensible.
When you actually need it, go for it. Don't confuse needs with desire. Loan must be taken Only when it's necessary. Also, check to see if repair costs can be covered by borrowing a few funds from the family or relatives.
7) Expensive consumer goods: Computers, kitchen appliances such as fancy refrigerators, furniture etc can be very costly if you actually are a person who wants everything as soon as it is launched. You can buy absolutely anything you want but first, ask yourself, is the thing really that important that I want to finance it with a loan. Can I wait to purchase it?
8) Funeral costs: getting a gold loan for your loved ones last rites is A golden gesture but first see if you can do it with the help of borrowed funds from friends and family.
9) Pets: animal care is no less than human care. The veterinary expenses can be as high as your own medical bills. Sometimes it can get really high if your pet has some serious health problems.
10) A small business: Gold loans are widely used by small business owners to finance their working capital requirements or to but the inventory. During covid times, it is one of the most availed loan products and was greatly used by small businesses across the country to start, restart or grow their businesses.
However it's essential to check the various costs associated with gold loans before availing one such as processing fees, interest rates etc. Check Muthoot Finance Gold loan interest rate and others here. Any form of loan must only be availed when there is a dire need or no other option for financing.
Must Read:- Benefits and Disadvantages of Gold Loan
