What Are The Features And Benefits of a Jewellery Loan?
People borrow money for a variety of reasons. It might be for personal reasons, such as schooling or purchasing a property, or it could be for commercial purposes. There are many different sorts of loan alternatives available for borrowers to select from to suit the various criteria of each of these demands. A gold jewellery loan is one of the best solutions you may explore if you need a loan.
Gold loans are becoming more popular for various reasons, including the fact that they may be used for a variety of purposes without requiring a specific explanation. Most individuals are aware of the benefits of gold loans, which include their affordability, convenience, and speed. However, not everyone is aware of the additional benefits of gold loans, making them an ideal solution for a wide range of borrowers.
What is a Gold Loan and its Features?
It is necessary to understand what a gold loan is before learning how it operates in India. A gold loan is nothing more than a secured loan through which you may get the needed loan amount in exchange for your gold jewellery and gold coins at a low-interest rate if you qualify.
When you want immediate finances, there are various loan choices available to you, but a gold loan may be the best option for you owing to its low-interest rates. You need to hand over the gold to the lender, and based on the total worth of your gold, you’ll get the loan amount.
Gold loans in India are popular since they are unsecured because you promise your gold in exchange for the loan money. As a result, if you fail on your debt, the lender may liquidate your assets to recoup the loan amount. Your gold will be stored securely in a full-proof bank vault until you return the loan amount.
As a result, you may put your assets to better use rather than leaving your assets idle at home. Listed below are some of the significant advantages of a Gold Loan facility that you should note.
- If you take up a Gold Loan, the interest rate is reduced, so you won’t stress about payments since the EMI is so much smaller. The average current gold loan interest rate is between 10% and 16%. If you and the lender already have a good working relationship, you may be able to negotiate cheaper rates.
- After the whole process is completed, you will be able to get the amount of money you need within a day. Authentication is as simple as providing the lender with your gold jewellery, and you’ll be able to access your loan funds immediately.
- You may select your payback term based on your ability to pay and your convenience. The most extended service period is 84 months (7 years); however, it might be as little as 12 months.
- A gold loan can assist you in obtaining the largest possible loan amount to meet all of your financial needs. You may borrow up to 90% of the total value of your gold, with a minimum of 65%. It implies that if your gold is worth Rs. 20 lakh, you can only acquire an INR 18 lakh loan. INR 13 lakh is the bare minimum.
Benefits of a gold loan
A gold loan, also known as a loan against gold, is a secured lending facility offered by banks and financial organisations that allows you to pledge your gold jewellery or decorations in return for funds.
Instant cash loans: You will have immediate access to your cash. You can find out how much money you qualify for a Gold Loan by using the online eligibility calculator.
Low-interest rates: The interest rate on a gold loan differs depending on the bank. Different lenders offer an appealing interest rate based on numerous parameters, such as gold purity.
Easy documentation: A Gold Loan’s paperwork requirements are less demanding than those for a Personal Loan. The KYC papers are the only documents that must be produced. You don’t have to provide evidence of your income.
Repayment at the loan’s end: A Gold Loan’s term might be as short as one year. You have the option of repaying the loan in six or twelve months. The Gold Loan does not include an EMI option; therefore, you have the option of repaying the principal and interest after the loan period.
Entire security: When you promise gold jewellery or decorations, they are housed in a secured vault in a bank’s secure chamber. As a result, you can ensure that everything is secured and safe.
To summarise, gold loans are a quick and easy option to get a loan and fulfil a financial need. Because gold loans have low-interest rates, many people prefer them to alternative gold loan choices. There are no foreclosure or processing costs with gold loans, either. Because the interest rate is low, many middle-class people take out a gold jewellery loan.