Gold holds a significant value and has been a source of substantial capital appreciation over the decade. Multiple reasons make a loan against gold an effective financing option during urgent financial emergencies. These financial products come in handy and can be obtained without any hassle whenever there is an urgent requirement for funds. If you possess considerable gold articles unutilised, you can acquire a lumpsum loan amount against it without any interruption.
In multiple aspects, gold loans are beneficial as it offers reasonable interest rates, flexible eligibility and documentation and easy repayment options. Here are some of the advantages extended by a gold-backed loan and why one should make the most of them.
Benefits of Taking a Loan Against Gold
It is evident that a gold loan is one of the few financial instruments to obtain sizeable funds quickly, safely, and hassle-free to fulfil varied financial requirements. This makes a loan against gold a better proposition when compared to other financing options. Therefore, gold loans from leading financial institutions are sought after as consumers enjoy multiple attractive benefits.
Following are the plethora of loan against gold benefits that individuals can avail:
Minimal eligibility and documentation
Since a gold loan is a secured credit, it does not impose strict eligibility parameters and extensive documentation. Irrespective of the employment status, one can qualify for the credit if they possess substantial gold items to seek considerable advances against it. Applicants should be within 21-70 years and produce KYC documents to avail gold loan. There is no need to produce your income proof and credit report for obtaining credit.
Besides, the amount an individual can avail of also relies on the LTV or loan to value ratio. Now, RBI has fixed the gold loan cap at up to 75%, and individuals can avail advances against it based on the evaluation of the pledged gold items.
Affordable interest rates
Unlike unsecured loans, gold loans attract affordable interest rates. If the loan amount is high, even a slight reduction of interest rates can ensure substantial savings on the repayment. This is because gold loans are secured advances, making for a beneficial option for the borrowers. One can simply obtain credit on the latest gold loan rate today, which is lower than other financial products.
Flexible repayment option
If individuals obtain a gold loan from leading financial institutions like Bajaj Finserv, they can enjoy flexible repayment options. For example, one can choose the repayment from the following:
- Individuals can choose to pay the interest component quarterly or monthly and pay the principal amount at the end of the tenor.
- One can choose the traditional paying EMIs involving the principal and interest component.
- Alternatively, one can choose to pay the total interest amount at the beginning of the tenor and pay the principal amount later.
In such a scenario, individuals can use a gold loan calculator to determine the amount they can avail and structure their repayment accordingly.
Faster processing
One of the biggest advantages of a loan against gold is quick processing. Since such a credit facility requires physical gold as collateral, lending institutions extend funds easily. Furthermore, it becomes a safe and convenient option for lenders as they can always sell the gold and retrieve the money. Due to this, the processing time is less, and most lenders disburse the amount within a few hours.
Nominal charges
Bajaj Finance Gold Loans come with a very nominal processing fee of 0.12% of the loan amount (inclusive of applicable taxes), subject to a minimum Rs. 99/- (inclusive of applicable taxes) and a maximum of Rs. 600/- (inclusive of applicable taxes). Bajaj Finance does not levy a foreclosure charge on our gold loans. However, if you close the loan within 7 days of booking, you have to pay a minimum of 7 days' interest.
No requirement of income proof and credit score
Another major advantage of a loan against gold is that the eligibility is very easy to fulfil. Individuals do not have to submit any income proof or show a healthy credit report when applying for such a credit facility. Moreover, since the loan is backed by the borrower’s gold items, lenders do not ask for income proof or credit score before sanctioning the loan.
Top-notch security
Since financial institutions are responsible for keeping your gold items safe, you do not worry about their safety. Moreover, these gold loans are usually kept in the vault or locker, comparatively safer than home. Also, lenders do not charge any extra fee for keeping your gold items in the locker.
Thus, a loan against gold is a convenient and hassle-free way of availing instant funds to meet varied financial requirements. Moreover, the above-mentioned illustration will allow borrowers to reap the benefits of this financing option.
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