Gold as we all know is one of the most precious metals which also has quite a substantial financial asset value attached to it. In a time, when the covid pandemic has almost stumped the banking sector. And put a stop to major areas or sectors of loan availability, gold loan is one sector that hasn’t suffered quite as much. What makes gold an attractive asset is the fact that its demand in the world market can never go down and only increases over time.
Further, the value of gold assets is always linked to a nation’s wealth and its performance in the worldwide stock market. So investing in gold or taking out loans against gold has never seemed to be a better option than now. A gold loan is one where the borrower deposits his gold articles or possessions as collateral against a certain loan amount at a prespecified interest rate or rate subject to the gold’s market value. Once he repays his principal plus interest amount he’ll be able to get back his gold articles.
Who offers Gold Loans?
The best decision for the borrower would be to choose the loan offer that requires the least interest rate. Usually, both private banks, nationalised banks and NBFCs offer such loans but while bank rates are lower with a shorter time for repayment, the private lenders have a higher interest rate with a longer time period for repayment.
Further, the latter offers you the sum almost instantly without a tedious process of verification but the risk associated with it is also quite hefty provided you default on the loan amount or period. You can approach either of these institutions for availing a gold loan but need to go through all the related documents thoroughly before investing.
What is the Process of Getting a Gold Loan?
Availing gold loans is a pretty easy deal. All you need to do is turn up at the bank with your necessary documents of ownership of the gold property and the articles you wish to deposit as collateral against the loan amount. The lender will go through these and then judge the articles you’ve deposited on the basis of two things – their weight and purity against the standard measure.
A certain percentage of that valuation would be available for a loan to the borrower since in case the latter fails to pay up or clear his dues the gold would be used to clear both his principal and interest dues. Hence it is always advisable to get all the details of your deposit and loan amount in writing. It is however highly protected, a quick fix to your liquidity issues and instant money problems and delivers excellent returns with fewer credit losses from a credit standpoint.
Advantages of Gold loans
By availing a gold loan, you can enjoy the following advantages.
- Gold loans are essentially easy loans. You do not need to deposit extensive paperwork or have a thorough background check done before investing. If you are short of liquid cash in your hands but have sufficient gold items lying idle in the locker without earning any interest, then it is always better to take a loan amount against those items, invest in something worthwhile and then get them back by repaying your dues from the yields of your investment. To find out how much loan you can avail against some standard gold amount, you can always take the help of the online hold loan eligibility calculator.
- The gold loan eligibility criteria do not take into account your financial backing, credit score, your job or designation or anything. All you need to provide are the details of your citizenship, your current residence, your ownership rights of the gold items and the amount you’re seeking against it. As such people from all strata of the society can avail this plan.
Some Other Advantages
- Gold loans are pretty safe in the sense that the business is on an upward swing in the loan market. What this indicates probably is the fact that more and more borrowers are trusting the gold loan market and finding it as a reliable source to take out money from.
- Gold loans also have an attractive and feasible tenure for repayment. Depending on the nature of the institution that you’re willing to borrow from, your term of repayment can range anywhere between 6 months to 24 months. Also, you can avail easy EMI options and attractive interest rates, completely on your own so there’s no chance of discrepancy at any future date.
Now that you know all about gold loans and what they have to offer to the borrower, you can perhaps make an informed decision that alludes to your tastes and preferences.