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What are the Advantages of Taking a Loan Against Gold?
We Indians love our gold. This undying fondness towards gold is in fact not unknown to the outside world, crowing India as the biggest importer of gold in the world. But what good will it do if all it does is sit inside bank lockers?
What is a Gold Loan?
Availing a monetary loan in lieu of gold ornaments and jewellery, which is secured by the lender, is one of the simplest and quickest ways to cumulate funds in times of need. Such a means to raise money is known as a gold loan, which can come pretty handy especially in urgent financial requirements. Factors such as the purity of the gold, its latest price and other details play an important role in deciding the loan amount during the process.
Why take a Gold Loan
If you utilize the potential of the gold ornaments you own correctly, it can very well be used to fund your emergency cash requirements such as medical emergency, child education, business expansion, down payment for the purchase of vehicle and holiday with your family and much more.
Over the years, gold has seen tremendous capital appreciation and is a store of value. If you are in a dire situation and need some cash urgently, the gold lying around in your house or bank locker can be put to better use with the help of a gold loan. These loans are one of the quickest and hassle-free ways of getting instant cash.
Benefits of Gold Loan
It is no hidden fact that gold loans are one of the few instruments to gather funds in a safe, quick and easy manner to fulfil your financial needs. But did you know that these precious loans offer much more than just raising an amount? Gold loans from major financial institutions throughout the country are highly sought after as the consumers enjoy a ton of attractive benefits when they take a loan against gold.
These are the top 7 gold loan advantages that await you when you choose to avail a loan against gold.
1. Quick Processing Times
One of the biggest gold loan advantages is quick processing times. Since gold loans include physical gold as collateral, banks and lending institutions are able to provide loans much more easily. For the banks, it becomes an easy as well as a safer option since they can always sell the gold in case of discrepancies and easily retrieve their money. And for this reason, processing happens in the fastest manner possible. In fact, gold loans by most lenders are usually disbursed within a matter of a few hours, hence adding a lot of convenience for the borrowers.
2. Minimal documentation
Another big benefit is that the lenders don’t need much documentation. A simple KYC based process ensures easy submission of only the necessary documents. A proof of identity, proof of address and a loan application are all the documents needed for a gold loan. There is no requirement to submit your income proof or your credit score as a part of your gold loan documents.
3. Lower Interest Rates
Gold loans attract comparatively lower interest rates as compared to unsecured loan options such as personal loans. When the loan amount is rather hefty, even a small reduction in the interest rate can lead to large savings. This is because gold loans are secured loans, making them a better proposition for borrowers. You simply get a loan on the latest gold loan interest rate which is lower than other loans.
4. Zero Processing Fee & Foreclosure Charges
Gold loans from most Non-Banking Financial Companies, or NBFCs, levy negligible to zero processing fees, since the loans are availed instantly against physical gold to be held by the bank. Similarly, pre-payment penalties are also waved off by most lenders. Waiving off gold loan processing charges as well as foreclosure charges further helps to minimize your expenses and total payout.
5. Flexible Repayments
The next big advantage of availing a gold loan is that borrowers enjoy flexible repayments. They can choose from various repayment options, such as the regular EMI option, or paying just the interest amount during the loan tenure and the loan amount at the end of the mandate, among others.
6. No Proof of Income or Good Credit Score
Another big benefit is that the gold loan eligibility from most lenders is very easy to fulfil. When you apply for a gold loan, there is no requirement of income proof or a good credit history. Since the loan is secured against the borrowers’ physical gold, lenders don’t ask for proof of income or credit scores as they are assured of repayment because of the collateral.
7. Security of Physical Gold
Since the bank, or the lender, is responsible for the safety of your precious gold once the loan is disbursed, it becomes less of a headache for you. Also, this gold is usually kept in the bank’s vault which is significantly safer as compared to your home. Once the loan is repaid, borrowers are returned their gold safely.
If you are looking for the best company for gold loan, then visit Muthoot Finance. India’s No. 1 Most Trusted Financial Services Brand as per Power of Trust TRA Brand Trust Report (2016-2020)*, Muthoot Finance offers the best low interest gold loans at flexible tenures with attractive repayment schemes.