HomeMoreGeneralTop Advantages of Getting a Gold loan

Top Advantages of Getting a Gold loan

Gold is a passion for Indians around the world. Gold imports from India are among the largest in the world. In addition to its value, gold is also considered a potential source of capital appreciation in the future. However, not many people realize that gold can also be used to fund any emergency cash needs, like medical expenses, children’s education, business setup, down payment for a vehicle, and even annual holidays.  

Your gold assets kept in bank lockers can help you to come out of a financial crunch. You can get gold loans which are available from many banks and non-banking financial companies (NBFCs). Anytime there is a need for instant cash, these loans can be sourced in a hassle-free manner. It is possible to get a loan against gold that you may own in any form, such as gold jewellery, gold coins, gold bars, etc. Taking a gold loan is a much better option than a personal loan if you plan to take a loan.

Interest rates

The interest rates on other loans, especially personal loans, are higher. In the case of the best gold loan, the interest rate is as low as 12 percent per annum, while rates range from 12.75 percent to 19 percent.

When compared to other loans, gold loans are much better. You can save a great deal by lowering the interest rate if the amount is quite large. Therefore, you should apply for a gold loan.

Disbursement of loan within an hour

For personal loans, disbursement could take up to 48 hours. You only need to gather your gold and your Aadhar card for gold loans, and you will likely receive your loan amount within 1 hour. This is especially true when you walk into gold loan companies like Muthoot Finance and Manappuram Finance. Therefore, you get the two benefits of quick disbursal and lower interest rates.

Fast processing 

Banks and other lending institutions can offer gold loans because gold is the collateral. When a borrower defaults, banks can easily sell the gold in case of a default. These loans are therefore usually disbursed within a few hours by banks. Consequently, borrowers benefit from shorter processing times and greater convenience.

Having a poor credit history has no impact

As a general rule, bank loans are granted depending on the borrower’s repayment capacity and credit history. A gold loan, however, does not operate in this way. Using gold as collateral ensures lenders will receive the principal component back and therefore don’t rely on the borrower’s credit history to grant the loan.

No income proof is needed

As a general rule, bank loans are granted depending on the borrower’s repayment capacity and credit history. A gold loan, however, does not operate in this way. Using gold as collateral ensures lenders will receive the principal component back and therefore don’t rely on the borrower’s credit history to grant the loan.

Only interest can be paid

Gold loans require you to pay only the interest each month. Assume you took out a gold loan for Rs 1 lakh at a rate of 12 percent. You can pay just Rs 1,000 per month and Rs1 lakh as a lump sum when you want to release the gold. If you want to calculate the interest rate of your gold loan, you can use rupeek’s gold loan calculator facility.

Early closure is free

There are no foreclosure charges associated with gold loans. These charges can go as high as 4 percent on personal loans, which is quite high.

What are the benefits of a gold loan over a personal loan?

If a borrower repays the loan in a shorter period, a gold loan may be a better option than a personal loan. However, personal loans are preferred by borrowers due to their longer loan tenures & higher loan amounts. Each borrower can choose between the two, depending on their requirements and financial needs.

Conclusion

It would be wise to wait before you mortgage gold if gold prices are expected to rise soon. Gold is used as collateral to secure loans. Therefore, if the price of gold increases, one can get a larger loan for the same amount of gold. You can reduce the amount of gold you offer to the lender if you need a lower loan. Similarly, if gold’s price falls, the lender may ask you for more gold shortly to compensate for the loss in collateral value. Hence, if you need to turn up the additional amount, ask yourself if you would be able to

You can get gold loans fast and easily, but you must pay back the loan, or the gold would have to be surrendered. A gold loan company would be a better option than a bank for taking out a gold loan, as they could disburse funds quickly. Although if you also want a gold loan from a reliable company, you can consider Rupeek, one of the best gold loan providers.

Komal Singla
I am a blogger and freelance writer having four years’ work experience! My passion led my way and turned a lecturer into an ardent writer. I love exploring, reading write-ups, and surfing the web during my free time!

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