What Are The Advantages of Taking a Loan Against Gold

Why are gold loans a smart financing option during emergencies?

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

A gold loan is a reliable financial solution for those looking to meet urgent or planned expenses without selling their gold. It is preferred for its quick processing, minimal requirements, and secured nature.

• A gold loan allows borrowers to pledge gold jewellery and receive funds almost instantly.
• It involves minimal paperwork, making it hassle-free and time-saving.
• The interest rates are usually lower compared to unsecured loans.
• It can be used for various needs like education, medical bills, or personal expenses.
• The borrower continues to own the gold and can retrieve it after repayment.
• Bajaj Finance offers flexible repayment options and high loan value per gram of gold.
• The pledged gold is stored safely, ensuring peace of mind throughout the loan tenure.
• Trusted by many, gold loans are among the most convenient and secure borrowing choices in India.

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 gold loan 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.Here is a list of interest rates applicable on gold loan.

Flexible gold loan repayment option

We offer multiple gold loan repayment options where you may choose to pay interest on a monthly, bi-monthly, quarterly, half-yearly, or annual basis as per your convenience. Please note that the principal amount and pending interest, if any, will be due for payment at the time of loan maturity. The repayment tenure can range from 1 day to 12 months. 

Individuals can use a gold loan calculator to determine the amount they can get against their jewellery and plan 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 0.15% 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.

Gold loan renewal

Borrowers may renew their gold loan at the end of loan tenure, subject to LTV being as per regulatory norms. A fresh credit appraisal will be done by us prior to renewal. However, renewal post actual loan maturity date is restricted.

Gold loan top-up

You can apply for a top-up on your existing gold loan before its maturity, as long as the loan-to-value (LTV) remains within regulatory limits and a fresh credit assessment is completed by us. However, if your loan has passed its maturity date but is still active due to outstanding dues, a top-up is not allowed.