Gold loans in India are provided to customers after assessing the quantity and quality of gold in the pledged objects.
Gold loans satisfy a variety of needs. It acts as a high-quality security option and provides it faster than issuing a loan.
Gold loans can become an ingenious tool that helps a person cope with the need for a loan, whether it is emergency medical care or tuition fees.
Commercial organizations can also borrow gold to get an overdraft on their gold assets to meet their working capital needs.
A gold loan can be a useful financial aid that an individual or legal entity receives to meet their financial needs.
Unlike other loans, regardless of whether they are secured or not, anyone between the ages of 21 and 70 can get a gold loan.
The pledged gold is the only guarantee provided to creditors when receiving a loan.
Factors to consider before getting a gold loan
, before taking out a gold loan, check whether the loan you are requesting has the following qualities:
Reduced processing time
Since physical gold is used as collateral in gold loans, banks and other credit organizations easily provide such loans.
For banks, a loan for gold is a more reliable option, since they can easily exchange gold in case the borrower does not make the payment. Therefore, banks, as a rule, issue such loans within a few hours.
This leads to a shorter processing time and, therefore, is an additional convenience for borrowers.
Low interest rates compared to other loans
Because gold loans are secured loans, banks may charge a lower interest rate than unsecured loans such as Personal Loans.
Interest rates on gold loans range from 13 to 14%. However, interest rates on personal loans usually fluctuate around 15%.
Interest rates on a Gold Loan are additionally reduced by the bank for borrowers who can provide additional collateral.
Is there an option to “pay interest only”
Gold loans often have another function that allows the borrower to pay only the interest component when repaying the loan. The main component can be paid at the end of the loan term or during the loan closing period.
No processing fee will be charged
In the case of personal loans, banks will not be provided with any guarantees. Then the credit companies review the documents confirming the income of the loan applicant.
So they end up charging a simple fee for processing personal loans. As a rule, the processing fee for personal loans ranges from 0.5% to 1% of the loan amount.
When applying for a Gold Loan, borrowers do not need to provide proof of income, as they offer their gold assets as collateral. This leaves aside the costs of treatment.
Re-processing can be performed
There is no limit on how many times you can pawn a certain piece of jewelry, gold coins or bullion. This helps clients repeatedly borrow on the same asset.
This feature is only available for gold loans compared to personal loans, where loans are issued depending on the client’s ability to repay the loan amount.
In addition, in the case of personal loans, a repeat loan from the same banking institution depends entirely on the client’s ability to repay the money at that time.
Possibility of flexible compensation
The advantage of a gold loan is the flexibility to repay the principal amount of the loan and interest on it in the form of a lump sum instead of the popular payment method of other forms of a similar monthly loan or EMI.
This feature benefits small business owners and merchants who have a temporary need for cash to obtain gold loans, unlike other lending options, when monthly issuers can put pressure on borrowers as early as a month after the loan is approved.
There is no need to provide proof of income
In most applications for a Gold Loan, banks do not ask borrowers for proof of income, since the loan is secured by gold secured by the borrower.
Your credit history is not affected by your credit history
In most loans, financial institutions provide loan amounts depending on the borrower’s ability to repay and credit history.
However, this does not apply to gold loans. Since gold is used as collateral, lenders are insured against repayment of the main component and therefore do not rely on the borrower’s credit history before the loan is granted.
Your gold is safe
The ability to safely maintain physical gold is a bank’s ability. It is usually stored in a safe place in a bank safe, and therefore borrowers do not need to worry about the safety of gold. As soon as they repay the loan, the gold will be returned to the borrower.
How to get a gold loan in India?
To get a gold loan in India, you just need to own gold. Unlike other loans, obtaining a Gold Loan does not require a lot of documentation or credit rights.
First, check all the options available to you. Find out about the conditions of various banks before choosing a lender.
The following aspects should be taken into account here: the interest rate, the term of the loan, as well as the value of gold.
Make sure that the promised gold will be kept safe until you clear the loan and want to return your gold.
You can take out a gold loan online or offline. If you want to take it offline, you need to contact the lender with the gold you want to pledge and the necessary documents.
After checking the documents and checking the purity of gold, the cost of the loan is estimated.