WHY TO CHOOSE GOLD LOAN OVER OTHER LOANS?

Gold loan is a quick and easy way to meet instant financial requirements at low interest rates. You can opt for this loan to meet a number of financial requirements, such as child’s education, marriage etc., or for investing in business. Instead of keeping your gold jewellery at home or in a bank locker, you can make this asset work by taking a loan against gold to meet your urgent financial needs.

WHAT IS A GOLD LOAN ?

Gold loan is a secured loan which is offered by banks and NBFCs against collateral i.e. gold jewellery, coins and other gold items. The gold is returned to the borrower upon the repayment of the loan amount in full. Generally classified as short tenure or medium tenure loans, gold loans are preferred over others types of loans owing to quick processing and disbursal without the requirement of tedious paper work.

THE MANY REASONS TO CHOOSE A GOLD LOAN

The benefits of taking a gold loan are many – hassle-free and quick processing, no hidden charges and safe storage of the collateral for the loan. Here’s why you should choose a gold loan –

Gold loans can be availed at a lower interest rate compared to most other loans
Loan tenure ranges from a few days to 5 years or more
Minimum loan amount of INR ₹1500 with no upper limit
There is no pre-payment penalty on gold loans
Minimal documentation
No credit history required
Fast disbursement i.e. loan is provided within a few minutes to a few hours.
Safe custody of gold given as collateral

Gold loans provide a lot of flexibility, something that is appreciated by those who take gold loans. At the same time, it is also the reason why many prefer gold loans.

ELIGIBILITY CRITERIA FOR GOLD LOANS

‘Minimal eligibility criteria’ is another reason for the popularity of gold loans. You do not have to be employed or have a regular source of income or even satisfy any income criteria to avail a gold loan. If you are an adult who owns gold, you can avail a gold loan. The loan amount which will be sanctioned will depend upon the value of gold given as collateral.
To reiterate it, the two simple points of criteria to fulfill in order to avail a gold loan are –

Your age must be above 18 years
You should own gold

DOCUMENTATION REQUIRED FOR GOLD LOAN

When it comes to gold loan, minimal documentation complements the minimal eligibility criteria. Unlike other loans which include exhaustive documentation, gold loans can be availed with only KYC documentation. To apply for a gold loan you will have to furnish the following documents: –

Two passport size photographs
Proof of identity such as voter ID card, passport, driving license, ration card, etc.
Proof of address such as Aadhaar card, electricity bill, telephone bill, other utility bills, etc.

TIPS FOR CHOOSING A GOLD LOAN

Gold loans are the best choice to meet your emergency fund requirements. However, you need to understand that you are borrowing money against your gold, which you need to repay with the accrued interest. In case you default on gold loan payment, then your lender has the authority to confiscate your gold to make up for the loss. Hence, you need to be cautious while opting for a gold loan.

Here are a few tips for choosing a gold loan-

There are many banks and NBFCs offering gold loans. So, to get the best interest rate make sure to compare the interest rates of different providers before choosing one.

Similar to other loans, there are certain add-on charges, such as processing fee, documentation charge, notice charge, etc., associated with a gold loan. Therefore, understand all the add-on charges before opting for a loan.

You must ensure the safety of the gold you provide as collateral for the loan. Check the security measures at the loan provider’s end for the security of your gold.

Compare the interest rates
Check the add-on charges
Security of your gold

Now that you know gold loans better, make sure you take full advantage of it, and educate your near and dear ones too; empower them to make the ‘better choice’ when it comes to taking a loan.