Looking For A Short-Term Loan? Take Gold Loan; Know Benefits And How To Get It

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Gold is the most precious metal in India. It is considered a prized possession not only due to its monetary value but aesthetic and heritage value. Almost every Indian household has gold in the form of jewellery and another ornament. Indians reserve their gold jewellery to take gold loans during financially difficult times. 

Taking a gold loan in these times of financial instability induced by the COVID-19 pandemic can serve you well. The Reserve Bank of India (RBI) has also increased the loan-to-value (LTV) ratio from an earlier limit of 75% to 90%, which means that you are entitled to a higher loan amount. 

How to take a gold loan? 

The process of taking a gold loan is easy and hassle-free. Both banks and non-banking financial companies offer gold loans. Visit one of the nearest branches of your lender and let them calculate the value of your gold. Every lender has an online gold loan calculator that can help you determine the loan amount along with the interest rate based on your needs. 

Upon filling out the application form and the complete submission of relevant KYC documents, the lender can approve your application and disburse the loan amount within 24 hours. The loan amount is credited to your bank account. 

Benefits of a gold loan 

There are several benefits associated with a gold loan that you can avail of to meet your financial needs. 

  • Quick approval and disbursal

Since the lender is assured due to the secured nature of the loan, the approval and processing time is significantly reduced. When lenders are sure that the borrowers will not default, they do not hesitate to approve and disburse the loan amount. The gold loan amount can be disbursed within 24 hours of the approval. 

  • Flexible repayment methods 

The best part about having a gold loan is that you can choose a repayment scheme based on your financial standing. You can choose to make regular EMI payments or pay the total loan amount at once at the end of the tenure. You can also choose to pay the interest amount at once and the principal loan amount at the end of the loan tenure. The loan tenure generally ranges from 6 months to 36 months. 

  • Low-interest rate

Unlike in unsecured loans, you can avail of the lowest gold loan interest rate by applying for a gold loan. As you pledge your gold as collateral, there are lesser risk factors involved, and thus lenders do not hesitate to offer low-interest rates and longer repayment tenure. It also allows you, as a borrower, to make on-time payments. 

  • High loan to value (LTV) ratio 

The loan-to-value ratio has been raised from 75 per cent to 90 per cent for Gold loans by RBI, which implies that you will likely receive more in the loan amount. Gold is already a highly valued commodity, making it a far better option to opt for a loan against gold. 

  • Minimum Eligibility Criteria

In stark contrast with an unsecured loan, there are minimum eligibility requirements to get a gold loan. If you legally own gold articles, you are eligible to apply for a gold loan. However, you need to furnish your KYC documents. 

  • Minimum documentation process

Any individual who is 18 years old or above and legally possesses gold in the form of jewellery and ornaments can apply for a loan without going through a complicated documentation process. There is only the need for your KYC documents in a gold loan application. 

  • Convenience

A gold loan can be secured most conveniently. You can either visit your preferred lender at one of its branches or call the executive to assist you online. The lender’s representative can visit you at your doorstep, calculate the value of your gold, and offer a loan amount based right on the spot. The loan amount gets directly disbursed into your linked bank account within a short turnaround time. 

  • Improved credit score 

Another benefit of having a gold loan is that it can help you improve your credit score. As the repayment tenure is longer and the gold loan interest rate is usually lower, you can repay the loan amount conveniently. Timely payment of the loan amount significantly pushes up your credit score. 

In a nutshell 

A gold loan is the best option to finance your expenses like medical emergencies, education, wedding, travel, etc. However, the challenge lies in finding the lender with the lowest gold loan interest rate with flexible repayment tenure.