Do you need funds to meet an immediate financial requirement? If so, the best way to cater to your needs is to pledge your gold jewellery to secure a loan. Banks and non-banking financial companies offer gold loans to help borrowers manage their finances without redeeming their emergency funds. The best part about getting a gold loan is that you can serve multiple purposes with the sanctioned loan amount. You can cover the cost of a medical emergency, education, wedding, home renovation, etc.
The loan amount depends on the market value of your gold items. Your lender may offer you up to 75% of the value of gold as a loan. The valuation of your gold jewellery is assessed based on the current gold rate. As it is a secured type of loan, you can get a lower gold loan interest rate. There is no capping on the maximum loan amount you can get. Your loan amount depends on how much gold you hold.
Gold loan: the best option to meet your financial needs
Anyone with legal possession of gold can apply for a gold loan. Unlike personal loans, you can secure a gold loan almost instantly. Besides, there is minimum documentation involved. Here is why a gold loan is best for your financial needs:
Easy to apply
The process of applying for a gold loan is straightforward. All you have to do is hand over your god and submit the relevant documents. The best part is that there is no need to worry about lengthy documentation. Your lender may ask for your KYC documents (identification and address proof), and PAN Card. You will need to fill in your application and submit it with your documents.
Unlike personal loans, a gold loan gets approved almost instantly, and the approved loan amount gets disbursed to your bank account within hours. When you visit your lender, they will evaluate the gold items you wish to mortgage and then offer you a loan amount ranging between 70-75% of your gold’s market value.
You will need to sign an agreement to accept the offer. If the amount is more than Rs. 200,000/-, it will be transferred to your registered bank account.
You can secure a loan with a low credit score
Since you are pledging away your gold jewellery as collateral, lenders offer loans even if the credit score is low. However, if you wish to secure a lower gold loan interest rate, you will need to maintain a healthy CIBIL score. The minimum CIBIl score requirement is 750.
Higher loan amount
Another benefit of getting a gold loan is that you can secure a higher loan amount based on your gold’s market value. Most lenders offer up to Rs. 1 crore against your gold. Keep in mind that the maximum amount available depends on the current market gold rate.
Serves multiple purposes
Although the gold loan is a secured type of loan, there is no restriction on the end-use of the sanctioned loan amount. It serves multiple purposes, which means that you can use it to cover the cost of expenses, such as medical emergencies, education, wedding, home loan down payment, home renovation, car repair, etc.
Affordable gold loan interest rates
Compared to personal loans in the market, the gold loan interest rates are low and affordable by all. Generally, the interest rates start from as low as 10% and go up to 15%, making a gold loan one of the affordable options to access funds. It is worth noting that the gold loan interest rate depends on factors, such as income and credit score.
Flexible loan tenure
Gold loans come with flexible loan tenure. The repayment tenure ranges between 6 months to 36 months. It gives you ample time to make repayments without hurting your monthly budget. Your loan tenure has a direct impact on your interest rate. The higher the loan tenure, the higher will be the interest rate. So, while applying for a gold loan, make sure to assess your financial situation to make an informed decision.
The gold loan interest rate is not the only cost associated with a gold loan. Other charges include processing fees and foreclosure charges. The processing fee generally ranges between 1% to 2% depending on the lender. Also, when you have the budget, you can choose to prepay your gold loan without incurring any foreclosure charges. So, while applying for a loan, make sure to choose a lender that offers such benefits.
A gold loan comes with the above-said benefits that you can avail yourself of. Getting a gold loan is the best way to meet your financial requirements without redeeming your savings.
Published by Doreen Burger