Gold has been one of the oldest modes of wealth exchange. It is one of those things, that have always been valuable and provide easy liquidity. Also, the lenders are more inclined towards providing secured loans. The charges and interest rates on unsecured loans are kept higher because it needs to be taken as a second option and not the first choice. This is because, in the case of an unsecured loan, the lender has to bear the risk of loss if the borrower denies reimbursing the funds due to financial crisis, or lack of intentions.
Gold loan's interest rates are much lower as compared to unsecured loans. And the lending institutions provide decent rates of gold loans per gram due to the low risks of lending money. Also, the processing of gold loans is also pretty easy and quick and the borrower can receive the funds within an hour. And in case of a financial crisis, people need funds immediately. Going for an unsecured loan isn’t a good option in case of a financial emergency. It generally involves a lot of checking and verifications which can take a lot of time. The borrower has to make several visits to the bank and provide numerous documents for verification. People with lower CIBIL scores can also get their loan applications rejected.
Creditworthiness plays an important role in getting an unsecured loan sanctioned. However, Gold loans provide a better option of getting the loans. CIBIL scores and other credits do not have any impact on the gold loan applications. Since the bank or NBFC already has the gold against which the loan is given, thus, in case the borrower is a defaulter, the lenders can always auction the gold to get their repayment.
The increase in the rates of gold has made the borrowers eligible for higher amounts of loans. Gold loans are one of the modes of money lending that have been practicing for centuries. All across the world, people have used gold to borrow money in case of financial emergencies. Thus, the security and trust that gold offers to the lenders are second to none.
In the modern age, there are many lenders in the market who provide gold loans. Therefore, you should always compare the ROIs and other charges involved in getting the loan finalized.
ICICI gold loans come with one of the lowest interest rates and it is pretty easy to avail them. All you need is KYC documents and gold that you can pledge to the bank.
Must read:- DIFFERENT METHODS TO REPAY GOLD LOAN
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