Since time immemorial, gold has been used as a great substitution of currency, thanks to its intrinsic value. Even today, gold loan offers various benefits and is considered one of the most preferred borrowing solutions, especially during a sudden financial crunch. Moreover, the gold reservoir of a country also indicates its economic standing. Thus, to keep the money market agile, almost all leading financial institutions offer loans against gold to eligible applicants.
Currently, when most loan segments are struggling due to the current economic downturn, gold loans have witnessed a whopping y-o-y growth of 132% to Rs. 43,141 crore in January 2021.
With gold being liquid and among the most secure collateral options, the demand for this loan was always steady, regardless of market conditions. Moreover, attractive gold loan benefits further fuelled the growth of this retail loan in India.
Benefits of availing of a gold loan in India
Following are some key gold loan benefits that intending borrowers need to learn about before applying for one.
High loan value
Depending on the eligibility of a borrower and the weight and purity of gold, lenders decide on gold loan LTV. Selected financial institutions offer up to 75% LTV and credits of up to Rs. 1 crore with other lucrative benefits.
Lenders approve the loan amount after the appraisal process is complete. Since gold loan benefits also include zero end-use restrictions, borrowers can utilise the loan amount to meet any financial requirement.
Lower interest rates
Another reason to choose gold loan finance over other secured credit is competitive interest rates. If one possesses a substantial amount of the purest form of gold jewellery, he/she can avail a sizeable loan amount against low-interest rates. It eventually lowers the monthly installments and ensures smooth repayment without imposing a financial burden.
However, these interest rates vary with lenders and thus, comparing them is necessary to avail for the best one.
Flexible repayment options
Besides affordable EMIs, the repayment options available for a loan on gold jewellery is another perk of availing of this advance. Selected NBFCs like Bajaj Finserv offer gold loan with a wide range of options to repay the amount availed. These include –
- Pay only the interest when the tenor starts and settle the principal later.
- Repay the loan through EMIs that include both interest and principal.
- Pay only interest on a monthly or quarterly basis and principal at the end of the tenor.
You can choose any of the options mentioned above, depending on your financial standing. Usually, the tenor of a gold loan ranges from 1 to 3 years, and you can renew the loan after the first year.
Credit score is not required
New-to-credit borrowers or individuals with poor credit score often face difficulties in availing of advances from reputed financial institutions. The problem amplifies in the case of unsecured loans, considering the higher risk on a lender’s part.
Therefore, individuals are left with limited options like borrowing from usurers in case of financial emergencies. However, with a gold loan, individuals do not need to provide their credit score and still can avail funds by pledging gold articles.
Besides, comprehensive documentation and lenient eligibility are some of the gold loan benefits you should consider.
To ensure 100% transparency and security, lenders offer doorstep gold loan in India. The process allows you to avail the funds without having to leave the comfort of your home. Starting from gold appraisal to loan disbursal, everything takes place in front of your eyes.
Once the loan processing is complete, the lender’s representative transfers the assets pledged, under world-class security, to the lender’s gold vault. The robust security measures ensure that your gold is safe under CCTV observations and insured by a lender.
Instant loan approval and disbursal
Since a gold loan is secured credit, the loan approval and disbursal take minimum time. Moreover, lenders disburse the loan amount directly to a borrower’s account.
Hence, individuals can apply for this short-term loan to address financial emergencies as well as to meet planned expenses.
Besides the gold loan benefits mentioned above, borrowers can also part-prepay and foreclose the loan account without paying any additional charges with selected lenders. Hence, considering the benefits, individuals can make the most of their gold equity and access funds without paying hefty borrowing charges.