8 Smart Benefits Of Taking A Gold Loan
Indians are known for their love for gold across the world. India is one of the biggest importers of gold in the world. Gold is considered to carry significant value and also as a source of potential capital appreciation for the future. However, not many know that gold can also be used to fund any emergency cash requirements like medical expenses, children's education, business set-up, down payment for the vehicle purchases and even annual holidays with family.
When you face a situation that requires urgent cash, you can make use of the gold that is lying idle in your bank locker. Today, many banks and non-banking financial companies (NBFCs) offer gold loans. These loans can come in handy and can be sourced in a hassle-free manner whenever there is a need for instant cash. You can get gold loan that you may possess in any form like jewellery, gold coins, gold bars, etc. Click here to learn more about Gold Loan right now.
Some of the main benefits of loans against gold are as follows:
Quick Processing - Since gold loans have physical gold as collateral, banks and other lending institutions easily provide such loans. For banks, lending against gold is a safer option since they can easily sell the gold in case the borrower defaults. Hence, banks tend to disburse such loans within a matter of a few hours. This results in a lesser processing time and therefore, added convenience for borrowers.
Pay Interest Only Option - Gold loans often come with a unique feature that allows the borrower to only pay the interest component while repaying the loan. The principal component can be paid at the end of loan tenure or during closure formalities of the loan.
Comparatively Lower Interest Rate - Since gold loan are secured loans, banks charge a lower interest rate as compared to unsecured loan such as personal loans. The interest rates for gold loans range from 13 to 14%. On the other hand, personal loan interest rates generally range around 15%. For borrowers who can provide additional collateral, the gold loan interest rates are further reduced by the bank.
Zero Processing Fees - Many banks and NBFCs do not charge any processing fees since gold loans are provided instantly with gold as collateral held by the bank.
Minimal Foreclosure Charges - Some banks and lenders either don't charge or have minimal prepayment charges of 1% on gold loans.
No-income Proof to be Furnished - In most gold loan applications, lenders don't ask for income proof from borrowers since the loan is secured against the gold pledged by the borrower.
No Impact of Poor Credit History - In most loans, the bank grants loan amounts depending on the repayment capability and credit history of the borrower. However, this is not the case with gold loans. Since gold is used as collateral, lenders are assured about repayment of the principal component and therefore don't rely on the credit history of the borrower before granting the loan.
Security of Physical Gold - The responsibility of safely maintaining the physical gold is that of the lender. It is normally kept safe in the bank's vault and therefore, borrowers don't have to worry about the same. Once they repay the loan, the gold is returned by the bank.
Conclusion
Gold loans are easy to get, but borrowers have to make sure that they repay the loan on time, failing which the gold may have to be surrendered to the bank. Borrowers can take a gold loan from a gold loan company of their choice since the disbursement process is generally quick and easy.