Why is a Gold Loan the most sought out loan?

Banks and Non-Banking Financial Companies are present to provide many financial services, and the most reputed loan is gold loan because of its many advantages.

Features of a gold loan

Loan amount: The bank or NBFC depending on the value of the gold sanctions loan amount. The lender checks for the purity and the weight of the gold article. The purity should be in the range of 18k-24k. The higher the purity and weight, the more the loan amount. Most banks and financial companies accept any type of gold article as collateral. But few financers don’t take gold coins or bars. So 80%of the gold’s value is granted as a loan amount, and the minimum loan amount is Rs 1500 in a few financial institutes. The gold loan per gram is the standard term financiers use to calculate the loan amount based on your gold article.

 Tenure: The loan term of the gold loan is known as tenure. It ranges from 3 months to 24 months in most banks and NBFCs.Some banks even offer up to 4 years as loan terms.

Interest rate: The rate of interest is a percentage of the loan amount availed and has to be paid each month as Equated Monthly Installment(EMI) without default. The interest varies from 7.5%-20%, and it depends on the loan amount and tenure acquired. The interest rate for the ICICI gold loan starts from 9%.

 The processing fee is incurred for the processing and approval of the application for a gold loan. The charge is usually 1% of the loan amount.

Prepayment charges are procured if the applicant closes the loan account before the end of tenure. The cost is NIL in many banks and NBFCs but few charge up to 1% of the loan amount with other tax rates.

Overdraft facility

Another added advantage of availing this loan is the overdraft facility. Using this facility, the loan amount borrowed can be used lie a credit card anywhere, and you can pay the interest amount whenever you wish. But if the lender asks for the interest, immediate payment is required. This facility is used by millions of gold loan customers and has excellent reviews.

 Various purpose of gold loan

Higher education: The amount availed using gold articles can be used to make yourself more knowledgeable and earn a degree from anywhere in the loan. Unlike study loans that can be used only for the tuition fee of the education, the gold loan can be used for other purposes like accommodation, purchase of books, laptop and other necessary equipment.

 Medical emergencies: Gold loan can be used for urgent medical needs. A gold loan is the best financial solution anyone can get during a pandemic or other health issues. Medical loans need documents and hospital bills to grant the loan, but a gold loan only requires essential id proof like a PAN card, Aadhar card, voter ID, and gold article to sanction money.

 Weddings: For marriage celebration and reception parties, this loan can be availed within hours and minimal documents. So even if it is a last-minute requirement gold loan is present to save you. The big day needs all the attention with complete glamorous. You can even use the official website of the bank or NBFC to take out the loan.

Vacations: A time away from reality is a pre-requisite. The money availed using the gold articles is best used by refreshing yourself and treating your family to Goa or Thailand. The loan amount can cover all your expenses, including flight charges and hotel bills. They are highly convenient with incredible offers.

Conclusion

A gold loan is an advantageous loan with flexible repayment options. After availing of the loan as a borrower, you should pay your monthly instalments on time. As the loan is secured, if the lender fails to see timely payments, they have the right o auction your gold.

Must Read:- Gold Loan Secured Loan