A gold loan is offered to a customer who offers to pledge his or her gold for some financial help as a loan. It is cheaper, easier and faster as compared to other types of loans. Even when the prices of gold skyrocketed we could see people buying the same amount of gold as they used to which signifies their obsession with Gold.
Benefits of Gold Loan
- Faster Process The foremost benefit of a Gold Loan is the process of financial help at a higher pace and in the safest manner. As gold loans are collected as physical gold, bankers are usually happy to give out the loan much easier to the customer. It's also safe for the banks as they have the option to sell off in case of default at the customer's end. This is one reason why banks disburse gold loans very quickly and easily.
- Lower interest rates and processing fees The next benefit of gold loans is one of the important factors when you apply for the loan. Gold loans offer lower interest rates in contrast to other loans. Usually, personal loans charge interest ranging anywhere between 15 % and 18%. Whereas, rates for a Gold Loan Per Gram start from around 13%, thus making it more economical for the average Indian family.
- Credit history is not required If you are looking to avail a loan, usually banks or financial institutions check for a credit history to make secure lending of financial support. If your credit history is low, they often reject loans on the criteria set by the bank. However, to avail of gold loans, no such formalities are required by the customer. Since the person availing loan needs to deposit physical gold with the bank, the latter does not demand credit history and the funding of the loan is easier on both sides. Banks such as the State Bank of Bikaner and Jaipur Gold Loan are considered to be one of the best in Gold Loan funding.
- Flexible repayment methods and tenure Another Gold Loan benefit is that it comes with flexible repayment tenures for the customer's benefit and requirement. The minimum and maximum repayment tenure for this loan are 6 months and 24 month. Moreover, you can get a high maximum Loan to Value ratio (LTV) of 75% of the calculated weight of gold you provide as an asset. You can choose to pay the interest upfront and pay the amount at the end of your tenure as stated by the bank. You can also choose to repay using regular EMI's set by the bank.
- Safe and secured Gold Loan is a secured loan that provides additional assurance to the lender due to the collateral involved in the loan process. Therefore this makes it easy for the customer to get the Loan as desired.
- Minimal documentation Buying a Gold Loan is easier as it does not require any documentation as compared to other personal loans. Thus it makes it a faster and easier way of funding. It is therefore the best option for any Indian household to opt for funding in case of an immediate emergency.
Conclusion: These are some of the benefits which people should understand before taking any kind of gold loan at any bank. This might as well help anybody who is still confused between a personal loan or a gold loan as the better option for a particular customer. However, proper research and guidance can surely help any customer with confusion about what is best for the right situation. It not only helps you with future endeavors but also gives us a sense of optimism which you next look for financial help.