Reasons To Choose A Gold Loan For Emergency

Indian families collectively own almost 25,000 tonnes of gold, according to the World Gold Council. The sentiments of people attached to gold are very personal. Gold jewellery, coins, and other articles often act as gifts between families, and individuals. This is one of the main reasons gold loan is a big thing for people. But if you analyze the benefits of gold loans you can make the most out of it.

For the duration of the loan, the bank uses your gold as security for a gold loan. Once you have fully repaid the loan, the bank will return your jewellery. In India, gold has changed from being a treasured metal used to create exquisite jewellery to becoming one of the most well-liked investment options. A gold loan can help you meet short-term fund requirements.

Reasons to Choose Gold Loan

Here are some reasons why the Gold loan is considered better than any other loan:

Interest rates

Regardless of the financial circumstances, borrowers usually appreciate cheap interest rates. Gold loans often represent a reduced lending risk for financial organizations since they are secured. There is less strain on your finances when repaying the loan because of the low gold loan interest rates. Personal loans, on the other hand, will have higher interest rates because they are unsecured. The quantity and carat of the gold you have pledged determines the gold loan interest rate.

No restriction on the purpose of spending

The loan amount is available for a range of requirements. It may be personal, a sudden medical need, or a work obligation. You don’t need to state the purpose of the fund. You can use the loan amount on a variety of things, including your child’s wedding, a medical emergency, your vehicle’s down payment, company expansion, agricultural needs, and more.

Quick approval and disbursement

The quick approval and payout procedures make the gold loan one of the best loans for emergencies. You may apply for this loan option by visiting the branch with your gold jewellery, and you can receive the maximum loan amount in one day. Not many documents are required for the authentication process. The loan amount will then be deposited into your account.

Minimum paperwork

getting a gold loan is simple and requires little documentation. All you will need are some simple KYC paperwork and passport-sized photos to get started. Due to the fact that they don’t require income verification, gold loans are a great emergency credit choice. To apply for a gold loan, you don’t have to provide a lengthy list of supporting documentation. Mandatory documents like a passport, driving license, voter’s ID Card, Adhaar card, PAN Card, passport-size photographs, etc would be required.

Flexible repayment

You may have more than one repayment option available to you if you choose a gold loan, making it simple for you to pay back the loan amount. The Gold loan does not impose rigorous qualifying requirements, like income proof or CIBIL score, unlike other loans. In addition to an EMI, a number of well-known lenders also accept an advance interest payment. As an alternative, borrowers can pay for everything at once. You may pick between four basic types of repayment options:

• the EMI method,
• interest payments made at regular intervals (monthly, quarterly, semi-annually, or yearly),
• upfront interest payments, and
• the bullet repayment method

The best gold loan plan will offer you the most simple repayment method.

High Loan Value

A gold loan‘s relatively high LTV (loan-to-value) ratio, which enables a greater loan amount during financial necessities, is one of its benefits. You may borrow up to 90% of the total value of your gold with a gold loan, with a minimum loan amount of 75%. By pledging more security, borrowers can enhance the gold loan amount. As a result, lenders had to make sure that their risk management and valuation procedures remained reliable, whether they were banks or NBFCs.

Factors affecting gold loan interest rates

Although applying for a gold loan is simple, you should be aware of the factors that affect the gold loan interest rate:

• Principle Amount: The amount of loan you need affects the gold loan interest rate. The higher the loan amount, the higher will be the interest rate. So, before you decide to get whatever amount you can get via gold loan, calculate you EMI with the interest and make sure you can afford to repay it.
• Market Price: Because there is less credit risk, lenders might be able to offer better interest rates when the price increases. People frequently invest in gold because it serves as an inflation hedge since the value of the currency declines during inflation. As a result, people can benefit from lower interest rates and increased gold prices.
• Income: Before issuing a loan, lenders will like to know your income. Higher income will assure the lender of timely repayment. Hence, they will charge you a lower gold loan interest rate. You can get a lower interest rate if you have a steady and high income.

Conclusion

Consequently, for individuals who own gold and need money for a variety of objectives, a gold loan is a great option. Keeping family gold reserves in a locker leaves them useless. The same gold, nevertheless, can save you in a pinch.

For all of these reasons, many middle-class people find the gold loan alternative more advantageous. We may therefore conclude that gold loans are a quick and practical option to cover your financial need. Check the best gold loan options at Piramal Finance which can save you from all the hassle. Easy loan processes, fast reimbursement, and tons of other facilities are available. For more details check the website now.