Gold loan is a better option than taking a personal loan. This is because it is a secured loan. In this, loan is taken by pledging gold. You can take a loan by pledging gold ornaments and other things in the bank. Your precious jewels in the bank are also safer than at home. There is no problem in taking this type of loan. You can easily borrow your gold from the bank. So through this article, we are going to give you information about the features of gold loan.
What is gold loan?
Taking a gold loan is actually a very simple process. The lender evaluates the value of the gold items the customer holds and examines the documents. The lender then approves the loan amount according to the market value of gold. You can withdraw the pledged goods by paying the principal amount along with interest.
How gold loan gives Benefits to You?
Gold loan has lower interest rates
Gold loans are cheaper as compared to personal loans. The interest rate of a personal loan is about 14-22% in a year, while the interest rate on gold loan is 11-12% per annum. Therefore it is better to take a gold loan than a personal loan. If you take a large amount of gold loan, you can save a lot in interest. So take a gold loan instead of a personal loan and save on interest. RBI is taking the LTV (Loan to Value) ratio of Gold to 75%. This means that you can get a loan of up to 75% of the value of the pledged gold.
Accepted in a very short time
Gold loan approval takes much less time as compared to personal loan. If you have all the necessary documents, the gold loan is approved within a day. Any person, whether salaried, housewife or self-employed, can take a gold loan. But there are some conditions in eligibility for personal loan. Along with this, farmers can also get gold loan for agricultural activities. For this, they just have to show documents related to agriculture. Paperwork is also very less in Gold loan approval. For this, all you have to do is give the identity card and some of your pictures to the bank.
Gold loan processing fees
Gold loan has lower processing fees as compared to other loans and is also zero in some cases. Processing fees are higher for personal loans, home loans and auto loans.
No credit history required
If your credit score deteriorates, banks may reject the application for a personal loan. The same happens in home, car and two-wheeler loans. When taking a gold loan, you have to pledge the gold bank and for this you do not need a good credit score.
Income certificate is not required
You do not need to provide proof of your income while taking a gold loan. At the same time, if you take a home loan, car or two wheeler loan from the bank, then you have to show proof of income. It is almost impossible to get most types of loans without showing proof of income. But there is no such problem in gold loans.
Only interest has to be paid every month
On taking a gold loan, you only have to pay interest to the bank every month. Suppose you have taken a gold loan of one lakh rupees at the rate of 12%, then you will have to pay only one thousand rupees every month. When you want to take back your pledged gold, you can make a one-time payment of one lakh rupees. Gold loan offers flexible interest and repayment of principal amount as per your convenience. You can pay interest every month, while total banks provide bullet repayment facility. Under this, you can pay interest and principal at the end of the loan term.
No extra charges for early repayment
If you repay the gold loan ahead of time, you are not charged any additional fees, while if you want to repay the personal loan ahead of time, the bank can charge up to 4% of the outstanding balance. But this is not the case with gold loans.
Gold remains safe
Your gold is safe with the lender. Your gold is kept in a vault in the bank and it is safe and secure 24 * 7. The bank also insures the pledged gold, so that it can be compensated in case of robbery or theft. So you do not have to worry about the gold kept with the bank and any other lender. It is more secure in the bank than in your home.