Date:20/03/2022

India is one of the largest importer and consumer of gold in the world. Gold is seen as a valuable asset and a potential source of future financial growth in our culture. However, a key aspect that individuals aren’t aware of is that gold can be used to satisfy immediate monetary needs. Numerous banks and non-banking financial institutions already offer gold loans. When you have an emergency and are in need of funds, gold loans may prove useful in these situations.

Here are some of the key benefits of taking a Gold Loan:

1. Low Interest Rates

Considering gold loans are secured loans, the interest rate mostly starts lower than 9 percent. The bank reduces the interest rate on gold loans for borrowers who provide additional collateral. This means that taking out a gold loan is less expensive for the borrower than taking out a personal loan. Even if they are constructed for the same amount of money, it is easier to repay gold loans than personal loans due to the comparatively lower interest rate on gold loans. Gold prices are at an all-time high, and experts anticipate that they will continue to grow. As a result, this is an ideal time to apply for a loan, as the gold loan per-gram interest rate will be at an all-time high.

2. Less Time & Processing Fee

A gold loan is a secured loan with a very brief time of disbursement. Typically, the borrower’s account is credited within 2 to 3 hours. Some lenders charge between 0.10 percent and 1 percent of the loan amount as processing fees for gold-backed loans, which are as low as zero.

3. Guaranteed Gold Security

The lender is responsible for keeping the physical gold secure. It is often stored securely in the bank’s vault, so borrowers do not need to be concerned. After the gold loan’s principal and interest are repaid, the bank returns the gold.

4. Inconsequential Credit Score

In most loans, the bank sets the loan amount based on the borrower’s repayment capacity and credit history. This is not the case with loans secured by gold, though. Since gold is used as collateral, lenders are confident in the principal payments and do not consider the borrower’s credit history. A borrower can obtain a gold loan even if they are unable to make payments on their existing debts or fulfill a financial obligation. Since the loan is secured by the gold pledged by the borrower, gold lending businesses often do not require borrowers to provide proof of income.

5. ‘Pay Interest Only’ Feature

Loans secured by gold typically feature a policy that allows the borrower to repay the loan by paying only the interest component. The principal component may be paid to gold loan businesses at the conclusion of the loan term or during the loan closure process

Final Words

Loans secured by gold are straightforward to acquire. However, the borrower must timely repay the principal and interest on the gold loan; otherwise, the gold may be forfeited to the bank.