India is one of the largest importers of gold and Gold Loan in the world. Indian citizens have a cultural connection with this yellow metal and purchase gold articles due to its high value and future possibilities of appreciation. Nevertheless, not many people know that they can utilise their gold assets to meet short-term financial needs.
Several financial institutions in India offer gold loans to eligible candidates. In this article, we are going to learn about the benefits such as low gold loan rate per gram, multiple repayment options, and more of this credit instrument.
Why opt for a gold loan to meet short-time cash crunches?
The wide array of benefits of gold loans, make it a feasible financial product during emergency cash crunches. The benefits associated with a gold loan are as follows:
Minimum processing time
Being a secured loan, lenders usually sanction a gold loan within a minimum turnaround time. In ideal situations, an applicant can get the money within 24 to 48 hours of applying for a gold loan.
Further, the processing charges for a gold loan can be as low as zero, while certain lending institutions charge up to 1% of the loan amount as processing charges. Willing applicants should check the associated fees before applying for credit and make an informed decision accordingly.
Simple eligibility parameters
Financial institutions in India set simple eligibility criteria for gold loans. This is because the lender can easily recover the outstanding dues by disposing of the pledged gold, in case of any credit default scenario. The eligibility criteria tend to vary from lender to lender. However, some of the basic parameters are as follows:
- Applicants must be a citizen of India
- They should belong to the age group of 21 and 70 years old
- Applicants can be salaried employees, self-employed individuals, farmers, traders, and others
In this context, willing applicants should know the types of gold required for a gold loan. Lenders usually accept gold ornaments or jewellery with a purity of 22 karats or more. One cannot pledge gold bars or coins in order to opt for a gold loan in India.
With gold loans, applicants just need to submit a few KYC documents, such as identity proof and address proof. Further, lending institutions might ask for an applicant’s income proof in order to establish their repayment capability.
Low interest rates
The leading financial institutions in our country offer low gold loan rate per gram. This is because gold loan applicants are of low risk to a lender as they can recover the money easily in case of a loan default scenario.
In this context, prospective borrowers can use a gold loan calculator to determine the monthly instalments and choose a lender that offers the best deals. The tool will generate the monthly instalments along with the total interest outgo at the end of the repayment tenure, based on several variables.
Multiple repayment terms
Besides affordable EMIs, gold loans in India come with lucrative repayment options. Leading financiers extend the following repayment options to eligible candidates:
- Borrowers can choose the option of repaying the entire interest amount at the start of the loan tenure and repaying the remaining principal later.
- Further, one can also opt for monthly or quarterly interest payments and the principal amount at the end of the loan tenure.
- Lastly, borrowers have the option of making repayments using the traditional EMI payment system.
When a person keeps gold articles as collateral, it is obvious that he or she will be worried about the security of the gold. However, with gold loans, borrowers can leave the worry to their financial institutions.
Reputed financial institutions in India take best-in-class precautions for the safety and security of collateral. They keep gold ornaments safe in a vault or locker placed in front of top-notch security cameras. Further, the robust infrastructures of these financial institutions provide added assurance for the safety of the pledged gold.
No usage restriction
Borrowers can utilise a gold loan to fund any sort of expense without any end-to-end usage restriction. A financial institution will not interfere to check where a borrower is utilising the funds.
To sum it up, a competitive gold loan rate per gram, high security, minimal documentation, etc. are among some of the most attractive benefits of a gold loan. Hence, it is evident that gold loans can be a viable option to arrange funds in times of emergency financial crisis.