What is a gold loan and the benefits of taking a gold loan?

SafeMACCS What is a gold loan and the benefits of taking a gold loan

While a gold loan may be comparably easy thanks to obtaining urgent funds, you’ll have numerous doubts about it. So, here’s is listing some of the benefits of taking a gold loan.

What is a gold loan and the benefits of taking a gold loan?

While a gold loan may be comparably easy thanks to obtaining urgent funds, you’ll have numerous doubts about it. So, here’s is listing some of the benefits of taking a gold loan.

What is a gold loan?

A gold loan may be a secured loan that you simply can get by promising gold ornaments as collateral with a bank. The banker will, in turn, offer you a loan amount approved by the market price of your gold. And after you complete repaying the loan amount and interest at the top of your chosen occupancy, your gold is returned.

How are you able to avail of a gold loan?

Once you’re taking the gold to a bank, they’re going to estimate its purity and tell you the loan amount that you simply can borrow. As per RBI guidelines, this amount is often up to 75% of the worth of gold. Gold loans don’t enforce any income documents except your basic PAN card and Aadhar card. what’s the worth considered? It varies. Some consider the daily price of gold while some consider the weekly or fortnightly average gold price to urge a clearer picture. The loan is secured by the gold which is actually promised to a bank. you’ve got to pay a processing fee which is charged as per the bank’s policy.

What are the Benefits of taking a gold loan?

Here are the most benefits of loans against gold are as follows:

Quick Processing – Since gold loans have visible gold as a promise, banks and other lending companies easily provide such investments. For banks, lending against gold may be a safer option since they will easily sell the gold just in case the borrower defaults. Hence, banks manage to distribute such loans within a matter of a couple of hours.

No Impact of Poor Credit History – In most loans, the bank grants loan amounts counting on the repayment capability and credit history of the borrower. However, this is often not the case with gold loans. Since gold is employed as collateral, lenders are assured about repayment of the principal component and thus don’t believe the credit history of the borrower before granting the loan.

Lower rate of interest – The interest rates for gold loans ranges from 13 to 14%. On the opposite hand, consumer loan interest rates generally range around 15%. Toward borrowers who can contribute additional collateral, the gold loan interest rates are moreover reduced by the bank.

Security of Physical Gold – The responsibility of safely maintaining the physical gold is that of the bank. it’s normally kept safe within the bank’s vault and thus, borrowers don’t need to worry about an equivalent. Once they repay the investment, the gold is returned by the bank.

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