Gold is one of the most precious metals that receives a good amount of capital appreciation over the years. For Indians, it is the most valued asset due to its high financial value and its role in traditions and cultures. Gold comes handy when a person needs cash to fund emergency needs such as business growth, child education, medical aid, and down payment for a vehicle. You can apply for a gold loan from a bank by pledging your gold ornaments or coins. Gold serves as an item of security with the bank or any financial institution until the loan amount is repaid in full. At present, there are diverse banks and financial institutions in India that provide gold loans at attractive interest rates. Mentioned below are a few key advantages of taking a gold loan for your financial needs:
Faster Processing
For banks, lending against gold is a secure option as they get the choice to sell the gold items in case the borrower defaults. Thus, banks usually give out the loan within a few hours or days. Also, as gold loan needs very few documents and does not need extensive eligibility checks, they are processed faster. It can save borrowers a major amount of time which is important in conditions when they need funds quickly.
No Credit History Required
A key advantage of a gold loan is that it does not require a credit history from borrowers. It has a simple and relaxed eligibility requirement as compared to other loan types. Other types of loans need candidates to have a strong CIBIL score, credit history, and income evidence, along with many other documents. These kinds of credit checks allow banks to confirm whether the borrower has a reliable income source to repay the amount or not. However, for gold loans, credit history is not an issue as gold is provided as collateral to banks.
Lower Interest Rate
Since a gold loan is a secure loan option, banks charge a reduced interest rate from loan candidates. You will notice that gold loan interest rates are much better to go with as compared to other types of loans. It makes repayment of the gold loans a lot easier than repaying the amount for other loan types, even if they are intended for a similar amount of cash. Thus, gold is quite advantageous for those who want a loan at affordable interest rates.
Easy and Minimum Documentation
Gold loan does not need long legal procedures and documentation or days and months to get sanctioned. You just have to follow an easy and KYC-based documentation procedure. When applying for a gold loan, you just have to submit vital documents including identity and address proofs.
Credit Enhancer
Though there are very easy and convenient eligibility criteria for candidates to attain a gold loan, it can act as a credit history booster in several ways. The repayment and interest rates are affordable, and thus can be helpful in a quick settlement. It will help in building up your credit score and history.
These are a few best advantages of a gold loan for financial needs. However, when opting for a gold loan images of your gold items for safety purposes. You must know that the complete procedure, loan amount, and approval of the loan depend on the purity and quality of gold provided.