Gold is seen as a significant asset in the investment landscape of India. Job losses, need for working capital, medical emergencies are some of the primary reasons due to which people pledge their gold assets in order to get the required fund. In this article, we are primarily going to talk about the reasons that make gold loans a viable option in 2023.Â
Why opt for gold loans?Â
The features and benefits of a loan against gold make it one of the ideal credit instruments for emergency cash crunches. Here are the reasons to apply for a gold loan:Â
- Instant approval procedureÂ
Being a secured credit facility, lenders usually approve and disburse the loan amount within the shortest possible waiting time. Further, gold loans require quite less paperwork when compared to unsecured credit instruments. The instant approval feature is one of the reasons for the growing popularity of gold loans.Â
- Low gold loan interest rate
Lending institutions in India offer gold loans at a low or competitive interest rate. This is because a lender can recover the outstanding dues easily from the pledged gold articles, during a credit default. Even a person with poor credit score can get the same interest rate as a person with decent scores, if he or she pledges high-purity gold assets.Â
- Sizable loan quantumÂ
Based on the amount and purity of the pledged gold asset, a financial institution decides the maximum loan amount an applicant is eligible for. However, due the pandemic scenario, the value of gold increased. Due to this reason, lending institutions tend to sanction a sizable loan amount using which a borrower can easily fulfil his or her financial needs.Â
- Multiple repayment termsÂ
Gold loan facilities come with multiple repayment options. Leading financial institutions extend lucrative repayment options, such as:Â
- Candidates have the option of paying the complete interest amount at the beginning of the tenure and repaying the rest principal amount later.Â
- Borrowers can also make monthly or quarterly interest payments and the principal amount at the end of the loan tenure.Â
- Lastly, individuals can choose to make repayments through the traditional EMI system.Â
- Gold loan transferÂ
Borrowers who are unhappy with the lending terms offered by their current financial institution can opt or a gold loan balance transfer. This facility allows borrowers to transfer their remaining loan amount to a new lender. Usually, people opt for a balance transfer if they get better terms, such lower interest rates, multiple repayment options, better customer support, etc.Â
- Simple eligibility parametersÂ
Unlike unsecured loans, such as personal loans, financial institutions offering gold loan set very simple eligibility parameters. Any candidate, be it a self-employed, salaried, farmer or merchant can opt for this credit facility. However, the applicant must fall in the age group of 21 to 70 years old.Â
Moreover, as lenders do not do strict credit score assessments, gold loans turn out to be one of the best financial options for those with a poor credit score.
Note: One important pointer to note here is that, an applicant cannot pledge gold bars or coins in order to get a gold loan. To get a gold loan, one must pledge genuine gold jewellery of 22 karats.Â
- Robust securityÂ
After applying for a gold loan, a borrower does not need to worry about the security of their pledged asset. The gold that an applicant pledges is kept in industry-best vaults and lockers under the surveillance of high-quality security cameras. Further, the robust infrastructure of the lending institutions offer extra security and safeguard the gold against all odds.Â
- No usage restrictionÂ
Gold loan borrowers can use the loan amount to fund any type of expenses without any end-to-end usage restriction. This is indeed one of the most beneficial aspects of a loan against gold.Â
In conclusion, a gold loan can be an ideal choice to fund expenses during a financial exigency. One can opt for a repayment option as per his or her financial capacity and avoid monthly burdens. However, irrespective of the type of repayment plan that one opts for, he or she must ensure to make timely repayments. This will ensure that their gold asset is safe and they hold the possession of their gold articles.Â
