Going by the Indian mindset, gold is an asset an investment
that will surely fetch you higher returns in the long term. Value for gold is quite
close to People in India and therefore, it is acceptable security in case
you are in need to take loan advances. Banks or other lenders welcome gold in
the form of jewelry as loan collateral and offer you a hefty amount to meet
your emergency requirement. Loan against gold is easily available and comes with several
benefits.
Benefits of Loan against Gold:
Fast and Easy:
These loans are fast and easily available
because of the gold pledged as security. The loan application processing is
fast and easy.
Low-interest Rate:
Since security is insured by the bank in
the form of gold, the bank offers a loan on the lower interest rate as they can get them
money back by selling the borrower’s gold in case the borrower defaults. The
interest rate is offered less than 15% which is the usual beginning of interest
rate on personal loans.
No processing fee:
Many banks, even NBFCs do not charge any
extra processing fee since the gold in the form of security with the lender.
Minimum documentation:
This loan only takes essential
documents that include your address proof, PAN, etc. whereas the documents are
less as compared to other loans.
No income proof:
Loan against gold doesn’t consider you
income as a primary criterion for offering a loan as it is secured with the
gold as collateral. The repayment plan is a concern but your income must be
sufficient for repayment along with the value of gold kept as collateral.
Low credit acceptable:
Credit history or low CIBIL score is
not a concern to offer this kind of a loan as far as borrowers hold the gold
assets. These assets are considered for security and repayment in case of
default.
Low foreclosure charges:
This loan doesn’t charge on
foreclosure of the loan. Some banks do not charge at all on foreclosures.
Gold security: The lender has the guarantee of all the loan
deposited as security. The gold is returned once the amount has been returned
completely.
The benefit of loan against gold that will be utmost
important to the borrower is the processing time. Since the bank is secure having
pledged the gold, the disbursal of this loan happens within a few hours also
that can be a great help to the borrower who is in urgent need of money.
There are certain insecurities as well for this loan the
obvious being losing the years long investment of gold in case you fail to
repay the loan. The gold in the bank’s custody would not be returned until the loan
is closed and there is no way to get it back. Be wise and only choose once you
are sure on your repayment.
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