However, many questions arise on whether this is the right choice, like even after getting a gold loan, will you be able to fulfil all your financial obligations? This article will explore the answers to these questions and much more.
Benefits of a gold loan
Here is a quick sneak peek at the features and benefits of taking a loan against gold. This will help you better evaluate the option and check whether it aligns well with your requirements.
1. High loan amount
Gold is one of the most highly-priced assets in the world. Gold prices continue to fluctuate, and the value keeps changing in the international market. However, the price of gold is usually on the higher side, increasing your borrowing capacity. The loan offered to you is based on the Loan to Value (LTV) ratio. It considers the present market value of your gold, a percentage of which is offered to you as credit. You can get up to 75% of your gold’s value as a loan. The purity of gold also plays an important role in determining the amount you are eligible to borrow. It should be 18 Karats and above. Only then can you get a loan against it. If you pledge gold of higher purity and if the LTV offered is high, you can borrow a large sum from the lender. This can help you fulfil major expenses like paying hefty hospital bills, financing a wedding ceremony, or funding your child’s education.
2. Low interest rates
When applying for a loan against gold, you are opting for a loan that falls under the secured category. This means that you are providing your lender with collateral, which they can take over if you fail to repay the borrowed amount. Your gold acts as security, making your loan a low-risk credit. Hence, the lender is likely to offer you a loan at a lower interest rate. Gold loan interest rates usually start from 8.5% p.a.
These low rates can help you save a lot of money on interest and manage your funds more effectively. Typically, your gold loan EMIs are likely to be lower than those for other types of loans.
However, if you are uncertain about the cost of the loan, you can always use a gold loan EMI calculator. With this tool, you can check the total overall cost of your loan and the monthly instalments you would be liable to pay.
3. Simple eligibility criteria
You might ask, what about the gold loan eligibility parameters? Compared to other loans, generally, a gold loan has fewer eligibility requirements. In the case of a loan against gold, the purity of your gold plays the most significant role. If the purity is 18 Karats or above, you are eligible to get a gold loan. Even students who do not have an income can get a gold loan.
Unlike other loans, usually, you are not required to have a high credit score or a specific income per month to prove your creditworthiness. Your gold acts as security and assures of your repayment ability. Gold loan eligibility allows you to get through the approval and sanctioning processes with minimal hassles.
4. Instant credit
While some loans such as a home loan require extensive documentation and verification processes and can take longer to get sanctioned, like a home loan, , the procedure for availing a gold loan is faster. All you need is gold with the right purity.
You can instantly get the amount required and deal with financial emergencies through a gold loan. Be it an unexpected accident or unwarranted business expense, you can pay for it by getting a loan against your gold.
5. No end-use limit
While some loans can only be used to fulfil specific needs, a gold loan can be used in a flexible manner. You can use it to plan your wedding, manage educational expenses, pay hefty medical bills, and so on.
You can also meet your business requirements with the help of a gold loan. It can act as an emergency fund or working capital. In case of unforeseen circumstances like layoffs, a pandemic, and other tragic events, a gold loan can help you tackle tough times with monetary support.
6. Easy repayment
In addition to the easy availability of a gold loan, even the repayment options are quite convenient. Lenders usually offer flexible repayment options to customers, allowing them to repay the loan amount at their convenience. This includes paying only the interest during the tenure and the principal amount at the end of the loan term.
This short-term loan usually does not carry any prepayment or foreclosure charges. Some lenders also allow customers to take back some of the gold offered as collateral by paying the designated amount. This makes it extremely convenient for you to get a loan and reclaim your assets whenever you want.
With easy gold loan eligibility criteria and low-interest rates, this type of loan is a good idea for those looking to meet short-term financial obligations. Multiple benefits and flexible uses offered by a gold loan make it an attractive option.
If you, too, have gold in your possession, utilise it to meet unwarranted expenses by getting a loan against gold. Use the money for personal or business needs and repay on your own terms. Get a gold loan and take advantage of this high-value asset.
Disclaimer: The above content is non-editorial, and TIL hereby disclaims any and all warranties, expressed or implied, relating to it, and does not guarantee, vouch for or necessarily endorse any of the content.