Indians value Gold a lot. There is a great cultural and religious value that gold has in this country and for this reason, almost every household possesses gold in the form of jewelry. It is also a good financial instrument and thus, people invest in gold coins and bars to preserve and use them as an asset. There are even special festivals dedicated to buying gold and that speaks a lot about how important this metal is in this country. Gold is also often used to raise emergency funds in case of any financial emergency. There are two ways to do that, one is to sell it and the other is to avail of a <a href="https://www.myloancare.in/gold-loan/">loan against gold</a> .
Selling your gold may earn you your money temporarily, but then you lose all ownership of it. You lose all the prospects the gold could have brought for you. Instead, if you pledge it as collateral and take a loan against it, you can use the gold in the future for other purposes as well.
How does gold loan work?
It's really simple. You take your gold to the lender. They assess the purity and value of the gold and give you a part of that value as a loan. Banks and NBFCs don’t usually ask for a healthy credit score to grant you a loan against gold since you put up the security. Gold loans can be used to meet short term financial emergencies.
Features and benefits of a gold loan
It is a very quick way of raising funds as the loan processing time is very less. There is little documentation required to get a gold loan approved and thus you can get the funds in your account within a few hours of the loan being sanctioned.
The <a href="https://www.myloancare.in/gold-loan-interest-rates/">gold loan interest rate</a> varies between lenders and also depends on the purity and value of the gold. As it is a loan against an asset, the rates often get competitive between lenders resulting in a low and suitable interest rate.
The security of the gold is assured by the lender. They keep it safe in their lockers with responsibility.
The tenure for this type of loan is quite flexible and can go on for a few days to a few years. It depends totally on your convenience and financial situation.
Loans like home loans, car loans, plot loans can be used only for that specific purpose alone. Banks and other loan providers often monitor the expenditure of the amount. There is no such limitation in the case of gold loans. You can use it for several purposes at your will. Ideally, it is advised that you do not buy more gold with a gold loan.
Additional charges while availing of a gold loan involve the processing charges and they take up less than a nominal portion of your loan. You will be required to pay a mere 0-1% of your loan amount as a processing fee.
You can even renew a gold loan after paying a minimum renewal fee.
This year was a year of disasters and most of it included unprecedented medical emergencies. With a fall in the country’s economy, people ran helter-skelter to raise funds. Hundreds of people lost their jobs and for many, the gold in their safes became the only thing to fall back on as a last resort. Selling gold means parting with it completely. Taking a loan is a much more wise choice as the gold remains yours and the metal being an asset can be beneficial in the long run.
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