Gold is a crucial asset class that has attracted individuals for centuries. Even Indian Central Bank holds massive gold reserves against their currency. This endows you with a fair idea about the importance of investing in gold. Gold as an asset class is appreciating in nature, which means its value enhances with time. Most individuals possess gold in few quantities as coins or jewellery. Gold is generally not sold unless the reasons are compelling. How can you use the idle gold lying at your home in the case of an emergency? Assuming you do not hold any other liquid instrument in your spare, can you opt for gold as a choice to raise finance? No, here, selling is not what we are emphasizing. You can, however, opt for the instant gold loan through Canara bank gold loan or SBI or HDFC bank or any other lender by using your gold in the form of collateral or security. Note that as a gold loan is a secured loan option, the interest rate on this loan option is often lower than unsecured loan options. For instance, suppose you consider opting for the Canara bank gold loan, then ensure that you would be eligible for a Canara bank gold loan interest rate of 9.15 per cent p.a., which is way lesser than the personal loan rate that ranges anywhere between 12 per cent p.a. and 24 per cent p.a.
Advantages of opting for an instant gold loan
There are various reasons to opt for a gold loan when you need instant funds. Any Indian or resident of India ranging anywhere from 18 to 70 years of age is eligible to place an application for a gold loan. Let’s know certain important benefits here.
- Putting idle assets to great use
- Lower rate of interest
- Instant loan in minutes
- Lower documentation
- Flexible repayment plans
- Safety for security or collateral
- Encrypted systems that offer data privacy
- Zero impact of having a low credit profile and score
- Good customer experience
- Putting idle assets to great use
A gold loan assists you in using your idle gold reserve efficiently during an exigency situation. The gold loan procedure is very simple. In place of borrowing from friends or family, you can easily mortgage your gold to avail loan for your child’s education, business, healthcare exigencies, etc. Once you repay your loan along with the interest constituent, you can take back your gold reserve from the lender.
Lower rate of interest
Just like secured credit options, gold loans are available to you at a low rate of interest. Gold loan rate of interest is extremely reasonable. Thus, it becomes very appealing for you to go for the cheap gold loan available at nearly 8 to 12 per cent p.a. as compared to unsecured personal loans at 15 to 24 per cent p.a. If you hold any unused gold at your home, it is the best way to efficiently use them. Likewise, you can even resist the urge to use your credit card for making any big-ticket transactions. Credit card institutions levy up to 52 per cent p.a. while gold may charge anywhere between 8-9 per cent p.a. However, lending partner selection is very crucial for you as a customer as selecting well can rid you from getting trapped in a debt cycle, i.e., making an incorrect decision, which may levy you a high rate of interest.
Also Check: Canara bank gold loan interest rate
Instant loan on the same day of placing the application
The gold loan may be processed instantly. Once you fill out the details on the lender’s site, an official representative visits your home. On visiting, the official will complete all the gold-linked documentation and valuation. Once this is done, the official will seal your gold in a tamper-proof bag, and the loan disbursement will happen. Gold will then be parked in the bank located nearest to you.
Unlike other loan options, processing a gold loan is very simple. It does not include complex documentation. As gold is provided as collateral or security, documentation linked with valuation requires being done. Note that the listed documents would be required –
- Passport size photos
- Identification proof like the Aadhaar card, PAN card, Passport, Driver’s license, Voter ID, or Ration card.
- Address proof – Voter ID, Aadhaar card, Driving license, or utility bill.
Flexible repayment schedule
You can simply get the most prudent gold loan deals if you conduct good research. A prudent deal may mean a good customer repayment plan, lower rate of interest, processing charge and suitable terms and conditions linked with loan prepayment. Note that depending on your convenience, the lender must allow you to make the interest repayment either on a monthly basis or repay the principal upfront at the closure time. Alternatively, you may also consider repaying both the principal and interest constituent in a single shot towards the end of the repayment tenure. The third option is to opt for the overdraft gold loan option, wherein the interest constituent may be levied on a monthly basis based on your usage.
Safety for your security or collateral
When you place an application for a gold loan, ensure to opt for a trusted lender. As you will be handing your gold over to them as security or collateral, you would require confirming the safety precautions incorporated to protect the asset you hand over.
An encrypted system that offers data privacy
All digital platforms require maintaining the data privacy of customers. If only the gold loan lender adheres to this, opt for it.
Zero impact of having a low credit score
Unlike a personal loan, wherein the CIBIL score plays a crucial role, it is not a very necessary parameter in the scenario of a gold loan. As the gold loan by nature is secured, the requirement of having a decent or satisfactory credit profile or score does not come up. This loan is backed by gold that you default. In the scenario of any default, gold may be sold to repay your loan.