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Looking for a Short-Term Loan? take a gold loan; know the benefits and how to get it
Few other commodities are as versatile as gold, more so for Indians. They regard this yellow metal as auspicious, a symbol of prosperity, and security for the future among other things. Over recent years, gold has emerged as a viable investment option too. Investors are not only investing in physical gold but also in digital gold such as Sovereign Gold Bonds (SGB), Gold Exchange Traded Funds (Gold ETF), and Gold Funds. However, due to the cultural attachment Indians have to gold, they find it difficult to sell off their physical gold to generate cash. So, what solutions do you have when an unforeseen event like a job loss or serious illness strikes you? Here is when your valuable gold jewellery can be used to take out a short-term loan against gold. And what’s more, you can easily complete the entire gold loan process from the comfort of your home.
Why Opt for a Gold Loan?
A financial emergency arrives without warning and you rush to arrange for funds to overcome it. The easiest option would be to use your savings or liquidate highly-liquid investments such as bank FDs. Loans are the next alternative when you need more funds. Unsecured loans like Personal Loans not only have very high-interest rates, but the documentation process could be cumbersome. On the other hand, you could apply for a low-interest, short-term secured loan such as a gold loan. Short-term loans are also available online. Almost all Indian households have some amount of gold ornaments that they can mortgage to meet their urgent financial need. Most private and public sector banks as well as Non-Banking Financial Companies (NBFCs) like Muthoot Finance offer gold loans. However, do check and compare interest rates, documents required for gold loans, and other loan terms as they could vary with different lenders.
Benefits of a Gold Loan
When we talk about availing of a loan, different loans serve different purposes. If you do not own an asset to mortgage, an unsecured loan is a way to go, albeit at higher interest rates than secured loans. However, if you do have an asset to give as collateral, an unsecured loan could be ideal for you. It should be noted that eligibility, loan approval, and the sanctioned amount depend on other factors as well. When you need immediate cash, you can benefit from gold loans which can be availed in a hassle-free manner.
Here are some of the reasons that make gold loans so popular:
Fast approval and disbursal: Whether it is an online gold loan or an offline one, the gold loan process requires the loan application, basic KYC documents, gold valuation report, Demand Promissory Note, and Terms and Conditions Letter. No income proof or credit score is required.
Easy eligibility parameters: Any Indian citizen above the age of 18 who is the rightful owner of the to-be-pledged gold articles is eligible for a gold loan.
High loan value: Banks can loan up to 90% of the gold value whereas NBFCs can lend up to 75% of the gold value.
Low-interest rates: As compared to unsecured loans, gold loans have a lower rate of interest. However, the interest rates could vary for banks and NBFCs.
Repayment flexibility: Most lenders offer upfront interest payments besides EMIs. Borrowers can choose to repay in monthly installments or a lump sum. These allow individuals to plan and manage their finances accordingly and avoid any payment default. Almost all leading lenders like Muthoot Finance have online payment options.
No end-use restriction: Gold loans can be used both for personal and business purposes.
How to Apply for a Gold Loan
The process of a gold loan application is quite simple and can be completed both online and offline. Here are the basic steps in the loan application process.
Step 1: You can apply for a gold loan through online or offline channels. To apply online, you will need to visit the lender’s website and click on the ‘Gold Loan’ tab. Select the gold loan scheme that suits you the best. Most lenders have online gold loan calculators through which you can check your eligibility, estimated EMI, etc. Next, you will need to click on ‘Apply Now'. Post this, you will have to enter the required details into the online application form and submit the form online.
Step 2: In the offline process, you will need to visit the nearest branch of the lender and complete all the formalities in person. Make sure to carry a copy of the required gold loan documents with you.
Step 3: Once you submit the application form, the lender will verify your application. If the application gets approved, you will receive the loan amount.
Gold Loans are the ideal way to put your unused gold items to use and avail financing against them. With the ease of application and disbursal as well as a host of other benefits, gold loans make it easier to tide over a financial crisis.
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