Key Advantages of Gold Loan

Today, the gold loan has become one of the most preferred loan options for Indians. A gold loan is offered against the current gold prices and the weight of gold items you deposit to a bank or gold finance company. Gold items such as jewellery, coins, and biscuits are used to fund emergency financial needs such as business set-up, medical expenses,   down payment for a vehicle purchase, child education expenses, etc. Nowadays, many banks and non-banking financial companies (NBFCs)   provide gold loans at a low-interest rate. These loans are easy to get and can be availed in a hassle-free manner whenever there is an urgent requirement for cash. Here are a few key advantages of a gold loan.

One of the best advantages of gold loans is the faster approval time. The application requires minimum documentation and even no requirement of a credit score. As the loan is backed by physical gold, banks and other gold finance companies try to disburse the cash within few hours. It makes gold loans a better option for people in urgent need. Also, it is safe for financial institutions and banks since they can sell out the gold item in case of default. 

As these are considered safe and secure loan types, banks and NBFCs charge reduced interest rates, unlike other loan facilities. The gold items submitted to the banks   act as security or a guarantee against your loan amount. Thus, lenders see no or fewer risks when providing gold loans to individuals. 

In other types of loan facilities, the documentation process for a loan application requires many details like tax records, salary history, and income proof. However, gold loans only need basic KYC details like identity proof, address proof of an applicant. So, the documentation work and process is lesser, quicker and hassle-free with gold loans.

One of the key advantages of a gold loan is its relaxed eligibility criteria compared to other types of loans. Banks and financial institutions ask borrowers to show their credit history, income proof, and CIBIL score when it comes to other loans.. People with poor or low credit history and CIBIL scores get their loan applications rejected by banks. However, there is no credit history required in the case of gold loans. As the borrower needs to submit their gold items to the bank, the lender does not ask for credit history.

In addition, the gold loan has an easy repayment procedure where the borrowers are allowed to choose to pay the interest amount in advance and the principal sum later while closing the loan. 

A gold loan comes with a lot of benefits and can help you in times of dire circumstances. However, it is vital to choose the best lender for taking the loan amount. It is also advisable to use a gold loan calculator to self-check the loan amount against your gold items.

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