Understanding the Features & Benefits of Gold Loan

by Atish Nair Consultant, writer

  Need cash on an urgent basis but hesitant about liquidating your assets? Consider borrowing money against your gold knick-knacks! While Indians are traditionally known to invest heavily in gold ornaments, the collection apart from rare flaunts at family function is generally consigned to bank lockers. Utilising the investment blocked in gold jewellery for cash flow during a financial emergency makes sense, right? Banks and various non-banking finance corporations (NBFCs) grant loans against gold jewels/bars/coins based on the market valuation of the collateral and the guidelines issued by the Reserve Bank of India (RBI). Upon repayment of the debt, the gold trinkets are duly returned. Now that we have some idea about loans on gold bullion, let's cast an eye on its key features.

Key Features:

●        This form of loan is less time consuming and offers instant liquidity.

●        The amount of loan starts from Rs.1500 but has no upper limits.

●        It comes with flexible interest and principal repayment options. 

●        The choice of loan renewal is also available.

●        Application for the loan does not require a guarantor for the backing.

●        Anyone can apply for a loan on gold by furnishing an Identity proof (ID) and valid address proof.

●        Prepayment and foreclosure facilities are also accessible.

●        It is a short-term loan that gives 12 months duration to repay.

Loans against gold are gaining popularity in India and rightly so. They not only offer cash liquidity but allow the borrower to maintain ownership and enjoy the capital appreciation of the asset during the loan period. Read on for some major benefits of the same.

Simple & Convenient Option for Funding:

Compared to other alternatives like personal loan, it is simple and the most convenient way to get liquidity. What’s more, paperwork is minimal and disbursal of funds are quick. Just pledge your gold as collateral with a bank or finance company and get about 80% of the market price of the precious yellow metal as a loan.

Low-Interest Rate:

The biggest advantage is the low-interest rates. Unlike personal loans that are available at interest rates of 15-26%, the gold credit can be acquired at a much lower rate of 10-16% per annum. This is because of the low-risk factor to the lender.

Flexible Repayment Options:

The repayment structure of the gold collateral loan is flexible. Since the cash outflows are not required to be in sync with the cash inflows, the borrower can opt for monthly payment via EMI for the whole term or bullet reimbursement at the end of the loan tenure.

No Credit Check Needed:

Have a bad credit history? Not an issue! If the gold provided as security is sufficient for the lender to fall back upon, he is least concerned about your CIBIL score, creditworthiness, bad debts or financial health.

What say, impressed by the features and benefits of gold loan? As you can see, it is a quick and easy way to borrow money with low-interest rates, less documentation, and an accommodating repayment structure. And yes, it requires no credit check or income proof. So, what’s stopping you? Go ahead and liquefy the gold jewellery stacked in the vault to tide over a short-term fiscal crunch!

 

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Created on Sep 16th 2019 03:38. Viewed 440 times.

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