India is one of the major importers of gold in the world, therefore, a significant number of people own gold ornaments. People are using idle gold jewelry to meet their immediate financial requirements by availing loan against it. Unlike other financing options, gold loans have turned out to be of great value in times of crisis. There are certain benefits that applicants can reap from this kind of loan. Some of them are given below.
Being a secured loan, gold loans are generally subject to lower rates of interest as compared to other financing options such as personal loan, home loans or other secured loans.
As gold loans are backed by physical gold, it thus involves lenient eligibility criteria and minimal documentation. This enables lenders to process the loan faster.
Gold loans are also termed as ‘ATL’ which means anytime liquidity. This means that you can avail a loan in less than 30 minutes without the need for excessive documents and paper formalities, unlike other financing options. This feature helps you to get an instant loan against gold whenever you require it.
Gold loans have a unique feature where the borrower has the option to pay only the interest part during the loan tenure and the principal amount at the time of closing the loan.
One of the best features of gold loans is that there are no processing charges involved. This makes such loans most preferable one.
Unlike other loan options, there are no foreclosure charges or prepayment penalty on paying the loan amount before the loan tenure.
Financial institutions generally do not ask for any income/salary proof from the applicants as the loan is secured against gold. Therefore, anyone can apply for a gold loan whether you are a salaried or a self-employed individual.
Unlike most loans, gold loan approval does not depend on your credit score. In this case, the loan amount is based on the market value of gold. But by taking a gold loan, you can build up a good credit score.
The financial institution offers triple-layered security for gold ornaments that you submit as collateral. Your gold will be kept secured in their vault throughout the time, you will get your gold jewelry back when you repay the loan amount in full.
Since there is no monitoring of the end-use of the funds availed through this loan, it gives you the flexibility to use the loan to meet any type of expense such as home repairs, higher education, marriage expenses or any medical emergency.
In nutshell, availing gold loans have quite a lot of benefits and it can rescue you in times of dire situations. The best thing about gold loans is its speedy disbursal, minimal documentation and simplified paperwork which is not in the case of other loan options. However, thorough research is always recommended before opting for a gold loan.