Are gold loans a good idea for long term

Gold loans are generally taken for a short term. It provides individuals with financial aid for a short period of time but is it a good idea to take a gold loan for a longer tenure?

Many banks and NBFCs provide this loan facility for the short term and after you repay the loan amount you can have your gold back with you. What if a person is unable to repay the loan amount in the short term? Is there any solution for this?

Yes! Now you can get a gold loan for a longer period of the term that is more than the usual tenure. You heard it right! Longer tenure. All the applicants who feel that they cannot repay the loan in the defined period of time can apply for a gold loan with a longer tenure. The usual duration of a gold loan is up to 12 months but there are many institutions now which provide you a longer tenure of 24 months. Because of the pandemic and a credit crunch in today’s economy, some financial institutions provide 2-year loan services. There are some benefits of this longer tenure too. Unlike the short term, a longer tenure of a gold loan will help you to pay back your loan with some ease. The main motive behind introducing this was to save the customers from the hidden trap of higher gold loan interest rates of some institutions and you do not have to re-pledge your gold again with the lender for your extended tenure. When you complete your 12 months duration of your loan, the extended duration of another 12 months starts automatically. After you pay your loan back by any method you can have your pawned gold back through auctioning.  

Furthermore, there is no need to worry about the security of your golden asset for another 12 months. The mortgage (gold) is kept under the tight security of CCTV cameras and electronic vaults. There is no chance of your asset being misplaced. In case, it happens unfortunately then the Bank or NBFC will be liable to pay you a certain amount of cash whatever will be the value of your gold. Taking a gold loan for a longer tenure may be a good idea for someone but longer tenure seems to be a burden on anyone. Choose your type and tenure according to your ease. Make your yellow metal asset to be beneficial for you. 

Also read:- Purpose of a Gold Loan