A gold loan is a secured loan taken by a borrower by pledging gold articles as collateral to a lender. Salaried individuals, self-employed people, traders, farmers or businessmen anyone can get a gold loan. When chosen wisely, the best kind of gold loan offers you quick money disbursal. And when you opt for a well-known non-banking finance company to enjoy a quick documentation process and other services.
Getting a gold loan is a convenient option for a person who already has the burden of paying for other expenses. When you apply to get a gold loan, the lender will first evaluate its value based on weight and purity. You will get around 75% of the total value in exchange for your gold. The downside of the gold loan option is that the collateral that you may deposit must not be adulterated with any amount of silver or platinum. Also, its quantity must be 22 carats or more than that. Although many jewellers and small-time lenders give out gold loans, you must always choose a reputed bank or non-banking financial company over such lenders because they offer better terms and conditions and safety.
Why should you choose gold?
Gold loan is the most preferred kind of secured loan. Gold loans are generally given out at lower interest rates than other financing options such as home loans, personal loans or other secured loans. When you opt for a gold loan, you can choose a repayment plan according to your convenience, and if you can repay the loan in a shorter time span, you will get a lower interest rate. The lender’s risk assessment decides the interest rate on a gold loan; it can range from 7-25 per cent per annum. A lender uses loan tenure, LTV ratio, loan amount, and other parameters to establish the interest rate on gold loans. Gold loans are short-term loans with an option of shorter repayment terms ranging from seven days to three years and have various other repayment choices. It can now be hassle-free because banks and NBFCs have started the doorstep service of a gold loan in the last few years, where they inspect and value the gold at the borrower’s place and disburse the loan in a few hours. When one opts for a gold loan service at home, make sure you deal with an NBFC that sends their own employees to your home for gold evaluation. The new generation fintech companies tend to outsource and hire third-party staff, where as NBFC’s like Muthoot Finance sends their own staff for gold evaluation and to complete gold loan formalities at your home.
Advantages of a gold loan
Opting for a gold loan is ideal if you need some funds in less time. You can opt for a gold loan if you do not want to take an unsecured loan and pay a high-interest rate. Gold loans come in handy when you have an urgent requirement of funds for unplanned expenses. You can put an idle asset to use when you apply for a gold loan and use it for big expenses like buying a house or studying abroad. Your gold will be valued at the current market rate rather than the price you bought it for.
A gold loan is one of the safest options if you want to get a loan to buy a house or study abroad. These were some reasons for opting for best gold loan offers you.