Safalaya

What are the advantages of a gold loan?

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What is a gold loan?

A gold loan is a loan where you get the loan amount by pledging your gold. Gold loans are the best instrument to get a loan in times of need. Gold loans are ideal during tough times when you need quick money assistance. But you’ll have to be very attentive while repaying the loan amount because if you miss a single instalment, then it will heavily impact your credit score, and you’ll have to pay charges for that. And if you can't repay the loan amount, then your gold will be seized and sold by the bank. 

What are the benefits of taking out a gold loan?

The gold loan attracts various benefits over other loans. There are the following reasons: -

1. The loan can be secured against gold. You just need a gold ornament to get a loan amount from any lender. 

2. You can exchange your gold for a loan at any bank or Non-Banking Financial Corporation. A lot of banks (like Bandhan Bank gold loan, State Bank of India gold loan or Axis Bank) and NBFCs provide gold loans these days. So you get a lot of options to choose from.

3. The interest rate in gold loans is as low as 7.00%. The interest rate is very low when compared to any other loans. You can lower your interest rate even more if you have any other asset you can give as collateral.

4. You can get a gold loan against any amount of gold jewellery. There’s no restriction to the shape, size and karat of the gold to get a gold loan. You can get a gold loan over any ornament, coin or gold pieces.

5. It does not require any income proof. So unlike any other loans, like a personal loan, you don’t have to give your payslip or bank statement to be eligible for the loan. Even an unemployed person can apply for this loan.

6. The gold loan can be taken out for the short term as well as the long term.

7. You don’t have to maintain your credit score to be eligible for this loan. Even if you have a poor credit score, you still can apply and get your gold loan approved. And if you pay your loan instalments on time, it will increase your credit score, making it easier for you to get any loan. 

How to take out a gold loan?

The process to take a gold loan is quite simple. 

1. Find an approved bank and then visit the website for a gold loan. You have the option to apply in both online or offline form. 

2. The next step is to visit the bank or call the bank to your home and get your gold value verified. So if your gold is authentic and the gold rate today matches the loan amount, then you can go ahead and check the eligibility criteria. 

3. Once you’ve met the eligibility criteria, you’ll be asked to fill an application form. So fill in all the necessary documents.

4. You’ll also be asked to attach some essential documents like Aadhar card, Pan Card, Passport, Utility Bills, etc., for verification purposes.

5. Submit all your documents to the bank, and the bank will verify the documents given in few hours to confirm your identity.

6. Once you are verified, the bank will disburse the loan amount to your bank account, or they may even give you a cheque. 

Conclusion

When you are thinking of taking gold loans, you should know that they are an instrument to get loans in less than three hours. It is the most simple and easy way to collect funds within few hours. But you’ll have to be sure that you repay the amount to the bank within the loan tenure.