Skip to main content

Advantages of Opting for a Gold Loan

 Loan against gold is one of the most secured and suitable options that an individual can opt for. In most Indian households, gold articles lie idle in the lockers. Therefore they can be put to use when you need immediate financial assistance in case of emergencies. You can pledge your gold to a financial institution like a bank or NBFC and get immediate funds. 


A gold loan is a feasible option as you do not have to sell your gold ornament and also can get immediate money. However, before applying for a gold loan, you must be aware of its procedure and merits. This article discusses the various benefits of a gold loan and what is the procedure to apply for a gold loan.


What are the advantages of gold loans?

There are certain prompt benefits due to which many people apply for gold loans. If you want to avail of this facility, then knowing its advantages will definitely help you. We are mentioning a few of them below.


Faster processing - If you require immediate funds then the gold loan is the best option you can choose from. Your loan amount is disbursed faster as compared to other types of loans. As the lender already receives the gold ornaments as security, the loan approval and authentication process does not consume much time. 


Credit history is not required - If your loan application has been rejected multiple times due to a low credit score, a gold loan is the best option. Lenders do not consider credit score when giving gold loans as the gold ornaments or coins are already presented by the borrower as collateral. Hence even if the borrower defaults, the lender can recover the money by selling the gold. 


Low-interest rates - Interest rates are generally decided by the lender dispensing on the repayment capacity of the borrower. Unsecured loans like personal loans, home loans, etc. have higher interest rates as there is no collateral provided. Since a gold loan is a secured loan, lenders provide them at low interest rates. 


Higher loan amount - Lenders make use of the Loan To Value (LTV) ratio to decide the loan amount that will be given as a loan. The amount can range from 65% to 90% in the case of a gold loan. Hence you get the maximum amount of gold as a loan. Suppose the value of gold pledged is 10 lakhs, you can get a minimum loan amount of 6.5 lakh and a maximum loan amount of 9 lakh. However, you must remember that the LTV ratio varies from lender to lender. 


Repayment flexibility - The freedom to choose the repayment payment according to your convenience is another added benefit of a gold loan. Unlike most of the loans that need monthly repayment, the gold loan can be repaid using four different methods that are stated below


EMI method - This includes monthly payment for the entire tenure selected by you consisting of principal and interest amount.


Interest payment at regular intervals - You have to pay the interest amount at fixed intervals i.e monthly/quarterly/semi-yearly/yearly and pay the principal amount at the end of the tenure.

 

Upfront interest payment - Pay the total interest amount at the beginning and principal at the end of the tenure. 


Bullet repayment - Pay nothing during the tenure and pay the entire amount including the principal and interest at the end of tenure. 


Income proof is not required - Most lenders do not ask for income proof while giving a gold loan as the loan is secured against gold. Hence anyone can apply for a gold loan. 
Labels:

Comments

Post a Comment

Popular posts from this blog

A Beginner’s Guide to Business insurance

All businesses look for profit maximization and risk minimization and an insurance does the latter for you. It reduces your risk of paying for unexpected damages and offers risk management services to safeguard your company or business from threats, perils, tragedies, etc. An insured business can - Be safeguarded from potential risks - provide benefits to employees - Focus on business goals - Reduce unwanted stress. Business insurance provides coverage to your company against any damage or loss through theft, sickness, accidents, injuries or deaths. YOU NEED BUSINESS INSURANCE TO • To manage risk and safeguard from natural hazards • To adhere to the law • Protect your employees with insurance • To ensure lawsuit and settlement coverage • To share only risk, no profit. • To secure copyright • Gain new and retain old clients with credibility • To retain your employees • It is a pre-requisite in most business contracts • Its not one size fits all • Insurance offers BOP ( Business Opport...
Post a Comment
Read more

Market Trends & Developments in India's Two Wheeler Loan Market 2020-2025

A Study on India’s Two Wheeler Loan Market The bike loan market in India is estimated to grow from $ 7.2 million to $ 12.3 billion by 2025. The projected growth in CAGR is more than 11% in the next five years. This growth is forecasted based on factors like growing disposable income and an increase in ownership of bikes. Technological advancement like a shift from combustion engine vehicles to electric vehicles, subsidies, new product launches, electric two wheelers and high vehicle replacement rate has boosted the two wheeler sales in the country eventually boosting the bike finance market. Two wheelers are a preferred mode of transportation in India as they are convenient in traffic congestions and also provide easy parking as compared to other vehicles. This has led to the adoption of two wheelers thereby driving the two wheeler loan market. Now banks and NBFCs provide the choice to apply for loan with minimal documentation. The net banking facility has eliminated the hassle...
1 comment
Read more

All You Want to Know About Two Wheeler Loan Finance

With increasing demand in semi rural and urban places, 2 wheeler market is a high growth industry.  This implies there is ample chance for two wheeler finance businesses.  There has been limited awareness about funding for a two wheeler from the olden times but with the rising penetration of financial institutions throughout the nation, it is now possible to get 2 wheeler finance conveniently and quickly. Obtaining 2 wheeler loan finance is now simple. The qualification standards, documentation necessity and the procedure has been cited below: Eligibility: Individuals over Age 18. Salaried people who were employed for at least a year. Business owners that are conducting a company for more than a year. Documentation : Identity Proof Address Proof Income Proof Valid KYC documents Passport size photographs Process: So as to apply for two wheeler loan finance , the applicant should scout the market for a variety of Banks and financial institutions that offer the loan. Depending on...
Post a Comment
Read more