Every Indian possesses a certain amount of gold. The gold assets in households are considered as status symbol, but these serve a greater purpose as well. If you are looking for ways to secure finance, then you can pledge gold jewellery at a bank or NBFC and get funds. Financial institutions are always eager to offer a loan against gold because gold ornaments appreciate in value over the years, and considered as riskless asset to be pledged for a loan.
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This is why gold loans today are known as precious money lending options, and we will tell you why it is so.
- Quick Approval and Disbursal
When you submit a gold ornament to a bank or NBFC, you can expect the loan amount to be credited in your bank account within minutes. There is no long-waiting period involved to process the loan. Most of the customers receive the loan the same day they apply for it. Some even get the funds within an hour’s time if the documents are in order and the gold is evaluated shortly.
- High Loan Amount
For agricultural purposes, loan amount starts at Rs. 1,000. For general purposes, you can borrow between Rs. 10,000 and Rs. 1.5 crore or more. Depending on your fund requirement, gold weight, purity, LTV, the loan amount will be decided. Thus, you can look for both low and high loan amount, when it comes to a gold loan.
- Basic Eligibility Criteria
There are no stringent eligibility criteria for loans against gold. Only PAN Card and Aadhar Card, along with few recent passport-size photographs, are required for the documentation process. The bank will not enquire for your credit report, until the loan amount required is too high. Anyone who is at least 18 years of age can apply for the loan. There are no guarantors or income proof needed.
- Safety to Gold Assets
The gold which you pledge at the financial institution, will receive complete protection against loss, theft, and damage. The gold is usually kept in strong vault, which has triple-layered security. The room, in which the gold is kept, receives CCTV security as well. Once you repay the loan, you will get back the asset.
- Low Rate of Interest
Compared to many other secured and unsecured loans, gold loans carry a lower interest rate, starting at 10.50%. If you are a woman or agriculturist, special gold loan schemes with discount rate of interest could be available. Thus, if you need monetary support, never hesitate to opt for a loan against gold.
- Multipurpose and Short Term Loan
A gold loan is meant for short-term expenses. Maximum tenure for the loan is up to 2 years. This loan is also used greatly for emergency cash needs, such as wedding, home repair, important purchase, travel etc. A short-term loan means that the interest amount paid to the bank would be lower than borrowing the same amount for a longer term.
- Flexible Repayment Options
You can pay a lump-sum amount over the tenure towards the loan repayment. Most of the NBFCs and banks have bullet repayment scheme, wherein you have to pay only the interest component each month, till the loan tenure, and the principal amount thereafter. You can also opt for a regular EMI scheme. Depending on the loan scheme and your individual profile, the best repayment schedule will be offered for a gold loan.
The above-given facts about gold loan will help you understand why a gold loan is the most trusted and useful financing tool for your monetary needs.