The Buyt Desk
If you are facing a financial crisis then gold can come to your rescue. The gold loan can bail you out. The demand for this loan has risen magnificently in the time of pandemics. The economic uncertainty, along with slow momentum, is the main reason for this drift.
Gold loans are very easy to obtain and repay. It is a secured loan where the borrower gets a loan by keeping gold as collateral with a bank or Non-banking Financial Company (NBFC). The lender gives loans valuing gold based on floating market value. After borrowers repay the lent amount along with interest, they get their gold back.
The fund received from loans could be used for meeting any financial requirements. So, if you are thinking of taking a gold loan, here are a few things you must know about –
What are the Requisites to Take a Gold Loan?
Gold loan is one of the simplest to obtain and requires minimal paperwork. Anyone above 18 years, having gold in any form, jewellery, bar, coins, can apply for this loan. The borrower has to take the physical gold to a lender. The lender checks the gold purity and offers prices according to prevailing gold value. According to the RBI guideline, the lender can lend up to 90% of the gold value.
The lender only charges a processing fee according to their policy. For the loan processing, the lender requires a few documents like identity proof and address proof. With all documents in place, the bank or NBFC disburses the loan within 15-30 minutes over the counter.
Know the Benefits Of Gold Loan?
If you are considering taking a gold loan, you must know its benefits.
Instant Approval – The documentation and processing time with the gold loan is minimal, thus quickly available. The borrower pledges the gold to the lender and gets money transferred in the account or cash in return.
Lesser Interest Rate – Gold loan is not affected by borrowers credit score. Even with a poor credit score, one gets the loan at the same interest rate. Furthermore, the interest rate of gold loans is much cheaper than the other options. The banks and NBFC are providing the loan with a lower interest rate. They are promoting various enticing schemes as well.
Loan Value – The loan amount depends on the amount of gold the borrower pledges with the lender. The gold prices rise during crises, as witnessed in the pandemic. So the borrower gets a handsome amount from the institution that comfortably fulfills their sudden financial requirements.
Easy Repayment Terms – The lenders have been promoting gold loans with enticing repayment options and interest rates. Though the repayment terms vary according to the loan amount, in general, it comes with one year tenure. Some lenders provide it for three or more years and simultaneously promote borrowers to pay monthly EMIs.
What are the Risks Involved With Gold Loan?
Gold loans are a secured loan, so do not involve risk. If you pay off the amount within time, you lose nothing except the interest, which is lower than the personal loan, credit card, and other options.
