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Advantages of taking a gold loan against your ornaments

People can liquidate their gold assets in times of extreme financial need and obtain a sizable loan amount from a financial institution. The money obtained by keeping gold as collateral enables people to pay for a variety of expenses, including down payments on cars, further education for children, company start-up costs, and many more. Read on to know the benefits of gold loan per gram. 

Advantages of opting for an online gold loan 

Intending borrowers should know the following benefits of opting for a gold loan in India: 

  • Low interest rates

As a secured borrowing option, gold loans require borrowers to put up their valuables as collateral with the lenders. As they have the gold deposited to cover the loss, financial institutions hold the right to auction off the gold and recover the outstanding amount in case of any credit default.

As a result, gold loans have a lower interest rate than other unsecured credit instruments. Additionally, borrowers can further reduce the interest rate and bargain with their lender if they can offer more collateral.

Hence, with lower interest rates, people can save a significant amount on the total loan amount and use their savings for other necessary expenses.

  • Easy repayment terms 

The ease of repaying the loan amount is one of the main advantages of a gold loan. People have access to a wide range of repayment choices. For instance, they can choose a “bullet payment” option and pay off the principal amount and interest during the end of the loan tenure.

  • People have the option of paying interest through EMIs and the entire principal sum at maturity.
  • Additionally, people have the option to pay interest and principal in instalments that fit them.
  • The final payment is the regular EMI, which covers both the principal and interest.
  • Sizable loan amount

Gold loans have become more popular among borrowers as a result of various advantageous aspects that ensure high loan amounts.

Individuals can get up to 75% of the LTV (Loan-to-Value ratio) by keeping their gold articles as collateral. Lenders determine the LTV for a gold loan per gram based on the borrowers’ eligibility as well as the gold’s weight and purity.

  • Simple qualifying criteria 

A gold loan has easy-to-meet eligibility requirements than other unsecured borrowing instruments, where lenders impose rigorous eligibility to protect their money. As a result, anyone possessing gold can apply for a loan and receive funding, regardless of whether they are salaried or self-employed.

Most crucially, people don’t have to worry about their credit scores while taking out loans against gold. Lenders do not do strict credit checks they are confident in getting paid, and thus they approve the loan. This is the reason gold loans are one of the best credit options for those with poor credit scores. 

  • Minimal documentation

Lenders typically want a lot of information and supporting documentation before authorising loans. These include tax returns, pay slips, and proof of income, among many more. However, such is not the case with gold loans.

Individuals just need to provide KYC documents, such as proof of income and identity, when applying for loans against gold. Therefore, documentation for gold loans gets verified more quickly than it does for other unsecured borrowing choices.

  • Quick loan processing 

A gold loan guarantees a quick and simple procedure. Applicants need to submit only a few documents to the lenders to swiftly process the loan and disburse the loan amount, typically within hours of application.

Contrary to conventional unsecured financing instruments, where borrowers must contact a lender and wait days or even weeks for approval and disbursement, the quicker processing time helps people save time and effectively manage their own financial demands.

  • Top-notch security 

It is obvious that borrowers will worry about their gold while opting for a loan against the yellow metal. However, since the gold loan policies ensure strong security, customers may leave the worry to the lenders.

Here, lenders take the highest precautions for safety and security and safeguard gold valuables in a deposit vault in front of a top-notch security camera. The gold treasures are kept safe and protected, thanks to the infrastructure that lenders maintain.

  • No end-to-end usage restriction 

Gold loans are not subject to end-use restrictions, in contrast to unsecured loans. It implies that people can utilise the money however they see fit without worrying about the lender interfering. Therefore, people can utilise this money to pay for any kind of expenses.

To sum it up, here are the benefits of opting for a gold loan per gram. Willing borrowers should keep these advantages in mind and make an informed decision accordingly.

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