5 Benefits of Taking a Gold Loan

People seek loans for a variety of reasons. Whether it is a financial emergency to cover college expenses, a medical bill, or a down payment on a home, loans provide quick and dependable access to funds. Banks and non-bank financial companies (NBFCs) offer many types of loans to qualified applicants. The loan against gold is one such category.

Indians are known to hold a substantial quantity of gold that is channelized to obtain funds when required. Most financial institutions offer personal loans against gold, which can be in any physical form.

Check Gold Interest Rate through GOLD LOAN CALCULATOR

Funds obtained by leveraging gold can be used for any personal purpose. Here, the gold acts as collateral until the debt is fully repaid. The growing propensity of people to seek gold loans suggests numerous advantages to doing so, some of which are listed below.

What are the Benefits of Taking a Gold Loan?

Some of the benefits of gold loans are listed below:

• Quick Processing

A loan against gold jewellery is a secured loan in which banks use jewels as collateral. This is a much safer choice because banks can liquidate the assets in the event of loan default. As a result, processing gold loans takes substantially less time, and some institutions lend the money to borrowers within hours. This increases the borrower's convenience.

• Low-interest Rates Charged

Another benefit of seeking gold loans is the low-interest rate charged by financial institutions. Since the loan falls in the secured category, the rate charged is less in comparison to unsecured loans like personal loans offered by banks. The interest rate charged varies depending on the bank and generally fell between 13% to 14%—this is much lower than the excess of 15% rate charged for the unsecured category.

• Poor Credit History Has No Impact

Banks and NBFCs use credit history as an essential criterion when approving and granting loans. It demonstrates the applicant's creditworthiness and commitment to repay the amount borrowed. It is a straightforward and dependable tool that banks use to assess the applicant's financial discipline. Generally, individuals with no or little credit history are frequently neglected by banks when it comes to loan approval.

This is not an issue with a loan against gold. In this case, banks maintain the gold as collateral and can liquidate it if the borrower defaults.

• Low Processing Fees

Personal loans are subject to processing fees levied by financial institutions. However, the costs for gold loans are kept modest. Additionally, some financial institutions do not impose processing fees at all.

• Low Foreclosure Charges

Another benefit of obtaining a gold loan is that banks waive or charge minimum foreclosure fees. This is advantageous since you can take custody of your assets as and when you return the loan amount without incurring any penalties from the banks.

Gold loans are a quick and convenient way to receive funds with minimal paperwork. However, the interest rates charged by financial institutions on these vary, and if you need to get one, you must compare and then choose the best gold loans accessible from multiple lenders.

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