What is a gold loan?: Gold loan is a loan that a person can avail by keeping his gold as collateral. If you need quick money for any essential expense, such as education, marriage, health, or any other important work, then gold loan is a good and quick option. In this blog, we will understand what is gold loan, the process of taking it, and how to avail its benefits.
What is a Gold Loan?
Gold loan is a secured loan which is given by banks, NBFCs (Non-Banking Financial Companies), or any financial institution. In this, the person pledges his gold jewellery or biscuits and receives a fixed amount in exchange for it. The loan amount depends on the purity and weight of the gold. The biggest advantage of taking a gold loan is that it is easy and quick to avail. You just have to submit your gold and some necessary documents and you get the money immediately.
How to take a gold loan?
The process of taking a gold loan is very simple and quick. First of all, you have to choose a reliable lender who provides the best terms for gold loan. Take the gold ornaments or coins in your possession in a clean condition. The purity and weight of gold is ascertained. Some basic documents are required for gold loan, such as Aadhaar Card, PAN Card, address proof and passport size photograph. When the gold is valued and the loan amount is decided, you have to sign the loan agreement. Immediately after signing the agreement, you get the loan amount in the form of cash or bank transfer.
Benefits of Gold Loan
Gold loan has many benefits which make it a preferred option. Firstly, it is easy to take a gold loan and cash is available immediately. Secondly, the interest rate of gold loan is much less compared to personal loan and credit card. Thirdly, you have many options for repayment, such as EMI or full repayment in one go. Apart from this, there are no end-use restrictions on gold loan, meaning you can use it for any purpose. Most importantly, there is no need of your credit score for this loan.
Things to keep in mind while taking a gold loan
While taking a gold loan, there are a few things to keep in mind. First of all, compare the interest rates of different lenders and choose the cheapest option. Sign the loan agreement only after understanding all the terms and conditions properly. Take a loan only after estimating your repayment capacity, so that repayment can be made on time. It is also important to understand the loan-to-value ratio, which indicates how much loan you are getting in front of the value of your gold. Do not forget to ask about processing fees and any hidden charges.
Problems and Solutions of Gold Loan
There can be some problems while taking a gold loan. If the lender does not give the correct valuation of the gold, you may get a lesser loan, so it is important to choose a reliable lender. If you are unable to repay the loan, your gold may be auctioned. Therefore, it is necessary to understand the terms of repayment and take a loan according to your financial planning.
How is a profitable deal a gold loan?
Gold loan is a good option for those people who want to reap the benefits of their gold without selling it. Low interest rates, fast processing, and flexible repayment options make it a convenient and cost-effective option.
Conclusion
Gold loan is a timely and profitable option when you need money immediately. It meets your financial needs instantly with a simple process and low interest rate. If you want to take a simple and secure loan using your gold, then consider gold loan. Always choose a trustworthy and reputed lender and understand the terms and conditions carefully so that you can meet your financial goals without any hassle.
