India's love for gold is known to the world. We are the biggest importers of gold worldwide. Gold is not only the store of value but has also seen a good amount of capital appreciation over the decade. But did we know that we can use this gold to fund our emergency cash requirements such as medical emergency, business expansion, down payment for the purchase of a vehicle, etc? If you are in a dire situation and need cash urgently, you can utilize the ideal gold lying in your locker to fund the emergency cash requirement. Many banks and Non-Banking Financial Companies (NBFCs) offer gold loans. These loans are one of the quickest and hassle-free ways of getting instant cash. You can get a loan against the gold in any form whether jewelry, gold coins, bars, and biscuits.
Gold loans are secured loans where gold jewelry is used as collateral. You pledge your gold jewelry with the lender and get a loan. The loan amount is usually a percentage of the gold's value. You can repay the loan through monthly installments. After the repayment, you get back your gold jewelry. Nationalized banks, private banks, and other financial institutions offer these loans at affordable interest rates. Usually, borrowers use this loan to meet a sudden financial gold, such as a marriage or a child's education. Instead of selling gold, many people prefer to opt for a loan.
As gold loans are secured loans, the gold loan interest rates are comparatively lower than unsecured loans like personal loans. Non-Banking Financial Companies (NBFCs) can charge a higher rate than banks. So, it is advisable to compare various interest rates before getting a gold loan. This can be higher than a personal loan, which has an interest rate of 12.75% or more, though this varies between different lenders.
When it comes to using gold loans, it has enormous uses. One can use the funds of gold loan wherever he/she wants to. You can plan a holiday abroad with the family, can use it as the down payment for the vehicle, or pay the medical bills which were not planned and sudden requirement of yours.
It does not have too many eligibility issues it is easier for the borrower to avail of this loan. Unlike personal loans, you do not need a bunch of papers for the approval of the loan. Just your address proof, ID proof, and passport size photographs. Being a secured loan, the banks do not even consider your credit history.
You need not worry about the gold pledged. The safety of the gold lies with the lender. It will remain in its vault and once you repay the loan you can take it back.
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