Gold isn’t new to us. Indians have been using gold for as long as the production of goods or even before. It is excessive here, and India stands proud as one of the largest consumers of gold. And a gold loan is one crucial usage of gold among millions, with the added benefit of being unique and coveted.
A gold loan is a secured loan provided by banks and Non-Banking Financial Companies (NBFCs) in return for pledging gold asset(s) for a certain period. As there is an abundant usage of gold and the ease of availability is high, the gold loan is more popular and in-demand than ever.
How is a Gold Loan beneficial than other loans?
The collateral of the loan is an incredible pro. Gold is readily available at homes and pledging it is extremely easy. Unlike other secured loans like car loans or home loans, where you have to pledge cars and houses, gold loans only require gold. It can be availed back safely after paying back the loan with interest. The tenure of the gold loan is short, so you only have to pay the interest for a small period, whereas other loans have a starting tenure of only one year, but in a gold loan, the tenure starts at three months.
A loan for three months is incredible. Plus, the loan amount is also high as it depends on the price of the gold. The higher the purity and the weight of the gold, the higher your loan amount. Most banks and financial institutes grant up to 90% of the gold’s value to a maximum of Rs 1 crore, the amount is based on the <>Gold Loan Per Gram. The most important aspect of a loan is the interest rate.
Car loans' minimum interest rate is 9%, a personal loan starts at 10%, a home loan’s minimum is 8% per annum, but in a gold loan, the interest starts at 7% per annum. Gold loans for agricultural purposes for farmers have even much less interest rate. Therefore compared to other loans, in a gold loan, you can get the maximum loan amount with a low interest rate and a compact tenure.
This way your savings aren't dented at once on the whole for a very long time. Additionally, a gold loan requires minimum documents. It only needs an ID proof with an applicant of at least 18 years and at most 75 years. Income proof, employment proof, bank statement and most importantly, credit score requirements are unnecessary in gold loans but essential in other loans like two-wheeler loans, personal loans, business loans, marriage loans or any other type of loan.
This minimum documentation requirement makes the loan processing excessively simple, thereby fastening the disbursal of the loan amount. Banks and NBFCs are providing both online and offline services. Upon choosing the online mode, you can apply with the internet, and an electronic gadget and the bank or NBFC picks up the gold from your house. And opting for the face to face method is also as easy as applying online.
The lender hands the money within several hours after approving the loan. The gold loan also has flexible repayment options. In most other loans, the bank or NBFC only offers the regular EMI method for repaying the principal and interest whereas, in a gold loan, there is bullet scheme payment and partial payment in addition to the regular EMI. in bullet scheme payment, you as a borrower pay the principal and the interest amount on the whole at the end of the tenure.
It involves no monthly instalment payment. In a partial payment method, you can pay the principal amount and monthly interest as you wish. You can create an online payment calendar with your lender and pay the principal with interest before the end of the tenure, however, and whenever you want. Finally, the regular EMI is the most common and widely used repayment option, where an Equated Monthly Instalment is made each month as interest, and the principal is made at the end of the tenure. Gold loan is extraordinarily advantageous and has incredible benefits in every aspect. PNB Gold Loan provides them most favorably daily to millions of customers.
Also read this: Gold Loan life saver