5 Benefits Of A Gold Loan

by Arjit Chalmela Finance Student

Many people are fond of buying jewellery, especially during festivals and occasions like weddings, parties, and other kinds of celebrations. Women especially have an attraction towards ornaments of different shapes, types, patterns and colours. They wear it wherever they go as it is a symbol of feminity, dignity and pride. They also invest in different kinds of banks dealing with the storage and interest rates of gold jewellery.

When it comes to purchasing gold ornaments for an occasion, many families cannot afford to pay high rates for them. Instead, they take a gold loan from a bank or a financial institution for the costs of their jewellery. They also get attractive interest rates on term loans, overdraft, and EMI based loans. They can choose to repay the loan in the form of flexible instalments over a tenure of their choice for easy arrangement of money. They start from three months up to two years. Borrowers have to repay only the loan interest monthly. The documentation process is smooth with speedy disbursals of the loan amount and transparent processing.

Following are the benefits of taking the loan from the bank:

Faster processing: The foremost benefit of taking a loan from the bank is that they process the loan quickly. As these loans deal in physical gold, bankers are often happy to give out the loan much quickly. They consider it safe as they have the option of selling the physical gold in case of default. They also disburse the loan amount within a short time.
Simple repayment procedure: Loan borrowers get a convenient process for repaying the loan. They can refund the interest amount in advance and the principal amount at a later stage or during the closure of the loan. It also attracts a lot of customers and enables them to meet their requirements without any issues.
Lower rates of interest: These loans offer a lower rate of interest compared to personal loans. Since these are secured, banks charge a gold loan interest rate ranging between 13 per cent and 18 per cent.
Zero processing fees: These are given immediately after receiving physical gold. Banks and NBFCs choose to deduct the processing fees since they consider the physical gold as collateral which they store up to a specific duration.
Credit history is not an issue: For any other kind of loan, banks and NBFCs usually ask the loan borrower to present their credit history and CIBIL scores. Only those who have a high score are eligible for the loan. But in the case of loans for gold, even those with poor credit history can deposit the asset and get the loan.