Financial Advantages of Obtaining a Loan against Gold
Gold Loan 1 Months ago Comments Share
Table Of Content
Why Get A Gold Loan?
- Instant Loans
- 'Pay Interest Only' Option
- Low-interest rates
- Negligible Processing Fees
- No Foreclosure Charges
- No Credit History
- No Income Proof
- Easy Repayment Options
A gold loan is a loan taken against gold. It’s a secured loan taken by individuals in financial need against their gold ornaments or jewelry. It's one of the easiest and most convenient ways to overcome a financial problem, which is why it has acquired widespread popularity. The rate of interest is generally less when compared to other bank loans. Gold can be used in both kinds, as an ornament as well as pledged security.
The gold loan procedure is effortless. You can pledge your job articles with any bank or institution and take a gold loan easily. When an individual needs to pay tuition fees, buy a car, expand the business, is faced with a medical emergency, etc., they can rely on gold loans as it is both easy and accessible. It only requires simple documentation, and the bank grants the gold loan to the borrower. You can also take an online gold loan through websites to save more time. There are various financial advantages of gold loans, which we will discuss in this article.
Why Get A Gold Loan?
The advantages of a gold loan are listed below:
- Instant Loans - Banks offer easy loans on gold as gold is a physical quantity. It is one of the safer options for banks as they can sell the gold if the borrower fails to pay the loan back to the bank. Hence, banks provide instant loans to borrowers. It might take 2 to 3 hours maximum due to documentation. Borrowers don't have to wait for days to sanction the loan amount, which is a huge advantage. It is perfect for individuals who need to cover instant financial problems. The processing time is less compared to other loan options.
- 'Pay Interest Only' Option - One of the most significant advantages of taking a gold loan is that you must only pay the interest loan every month. There are various other options for repayment of a gold loan. However, the majority of people opt for the 'interest only' option. It allows people to pay only the interest rate every month and principal amount later while closing all the formalities at the end.
- Low-interest rates - The interest rates on gold loans are comparatively lower than other bank loan options, such as home loans, personal loans, etc. The interest rates range from 11.5% to 14-15% based on collateral or gold articles. On the other hand, the interest rate charged on personal loans ranges from 15% to 20% based on different institutions and banks. It makes gold loans a better option for many individuals when compared to other loan options. Interest rates create a significant difference.
- Negligible Processing Fees - Shriram City charges a starting processing fee of 0.1%, which is almost negligible. Some banks don't charge a processing fee. On the other hand, personal loans or home loans charge a minimum of 2.5% processing fee. So, gold loans are considered a better option compared to other loan options.
- No Foreclosure Charges - Shriram City doesn't charge a foreclosure fee on gold loans from borrowers. Some banks charge a prepayment fee of 1%. So, Shriram City gives you the added advantage of saving money on foreclosure charges. It helps you save money and get easy, instant loans with little to no charges.
- No Credit History - One of the other advantages of a gold loan is that it doesn't require any credit history, unlike unsecured loans. In the case of other loan options, if you don't have a good credit score or history, a bank might decline your request for the loan. However, in the case of gold loans, banks don't do that and provide you with a gold loan regardless of what your credit history looks like, which is a significant advantage.
- No Income Proof - Shriram City doesn't require any income proof from borrowers. The loan is given solely based on the value of pledged gold articles. Income proof is not essential in the case of gold loans as it is a secured loan. In the case of unsecured loans, banks and institutions ask for income proof and give a loan based on the documents and evidence. If the borrower cannot pay the loan amount on pledged gold, the bank or institution will sell the gold to cover the charges. This is one of the main reasons income proof is not required, and anyone can get a loan based on the value of gold articles.
- Easy Repayment Options - Another advantage of obtaining a gold loan is easy repayment options. Borrowers can choose any option for repayment, such as Periodic Interest, Periodic EMIs, Bullet Repayments, Partial Payments, Overdraft Payments, etc. It gives flexibility to borrowers to pay the interest and principal amount as per their requirements. It allows borrowers to take loans instantly without any burden. They can also select the tenure of the gold loan as per their requirements.
Thus, to conclude, we can say that gold loans are a fast and convenient way to obtain a loan and meet your financial contingency. Many individuals prefer gold loans over other gold loan options because of low-interest rates. Gold loans also don't have foreclosure charges or processing fees. It is close to negligible, which makes the gold loan option more suitable for many middle-class individuals. For more details on gold loans, their eligibility, and benefits, you can refer to Shriram City for an instant gold loan.
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