Loans can be taken through friends, family or specialized credit lensing agencies. Loans from friends and family can be interest-free but they can put you in awkward relationships. Other options include personal loans, loans against Fixed deposits, Gold loans etc. Personal loans can be highly expensive when it comes to cost and interest. Loans against Fixed deposits and life insurance come with limited loan amounts. Gold loans however are the cheapest and most profitable in this case. With the lowest document requirement, lowest interest rates and negligible other costs, gold loan stands a clear winner among other loan products.
Let us understand in detail, what makes gold loans the most profitable and cheapest option:
Lowest interest cost
Gold loans have interest rates ranging from 7 - 18 per cent approximately. This is the lowest you will get on any loan that doesn't have the restriction on its end use and at the same time doesn't have a lower maximum amount ceiling. Therefore, you're saving in terms of the lowest interest rate, with the benefits of flexible end-use. Check the Gold loan interest rates of various credit lending agencies here.
Lowest processing charges
The processing charges are found only in this loan product. It's as low as 1 per cent! That Is owing to the technological advancement we have now. The XRF technology being used in most leading banks has significantly reduced the time and cost that the previous methods took. Taking about other loans such as personal loans, they charge very high processing fees, around 5 per cent.
No prepayment charges
If you don't already know what are prepayment charges, replacement charges are the money charged to you if you pay more money than the EMI for the month. This is because the extra money is deducted from the principal amount which then reduces the interested borrower pays on the leftover months. Since this reduced interest means reduced profit for the lender, they cover it up with extra prepayment charges.
In the case of gold loans, the interest for the whole tenure, usually, is calculated beforehand and is the same for every month. This means that the interest is not charged on the leftover amount but the beginning amount all at once! Therefore even if you prepay, there is no loss to the lender that is why they don't charge anything.
No Foreclosure Charges
Foreclosure or full prepayment means closing the loan by paying before maturity. Now same as mentioned above since paying any amount before the maturity does not affect the interest payment to the lender, they do not charge any fees on foreclosure.
No hidden charges
Most of the Gold loan products has only these charges- interest fees and processing fees. Therefore you need not worry about other fees.
No income criteria
Even if you don't earn any income, you are eligible for a Gold loan. This is because, in India, Gold is not just seen as jewelry or an investment, it is seen as a pious metal that is perpetuated in families generation after generation. Some families even hold gold ornaments that are a century old!
Lowest documents required
You just require identity proof and address proof for being eligible to get a loan against Gold. For identity proof, you can bring in your Aadhaar card, PAN card, driving license etc. For address proof also you can bring your Aadhaar card, passport, PAN card etc. Just two documents and you are good to go. Look for the nearest branch of the credit lending agency you are thinking to get a loan from by writing credit lending agencies name followed by 'near me' for instance: Manappuram gold loan near me. Similarly, you can find the nearest branch to any agency. Loans against Gold have proved to be the most profitable loam product for people in need for centuries and is still growing to be more and more popular every day.
Also Read:- SHOULD WE AVAIL OF A GOLD LOAN OR HOME LONE TO BUY A HOME