What are the procedure, merits, and demerits of gold loans?

Gold loans have recently become extremely popular. This is partially due to the steadily declining economy of our country, unemployment, and the recent lockdown due to the pandemic situation. A big surge has been noticed in gold loan demand because the people are facing a serious financial crisis. Gold loans have a lot of benefits over other types of loans as they are cheaper due to their low-interest rates, they are secured so the bank is more open to providing the loan to more people and the processing time is very short so, the loan is faster than most. Seeing the popularity of gold loans, a lot of banks and financial institutions now give out easy and affordable loans among which the gold loan by Manapurram is one of the leading names all over the country.

So, given the surge in demand, here is everything you need to know before applying for a gold loan!

PROCEDURE:

When compared to others, the gold loan application procedure is fairly straightforward. There is a basic eligibility criterion under which the applicant has to be over the age of 18 years, they should own the gold which is being deposited and they should have a government-approved identity proof and address proof. Then you just have to select the lending bank or financial institution which suits your needs, fill in the application form, get the gold weighed in and deposited, finalize the loan amount, choose a repayment plan and tenure and that’s it! You should, however, keep in mind to select an appropriate repayment instalment which can be done easily using a gold loan EMI calculator. This process hardly takes a few hours and you can be in and out of the lending institution quickly. 

Now, every good decision is made by weighing out the good and the bad. 

MERITS:

• A gold loan, as discussed above, is very quick to process and does not require a lot of paperwork or documentation.

• The interest rates on gold loans are very low when compared to other types of loans.

• As it is a secured loan, a gold loan does not require a person to submit their credit report or CIBIL scores, therefore, a person with a bad credit history can also avail of a gold loan.

DEMERITS:

• As it is a secured loan, the person applying for the loan needs to deposit a collateral amount. This means that the person should own the gold they need to deposit and it should be of more value than the loan amount they want.

• The gold loan is provided given that if any arrears occur or the repayments get delayed over a certain time period, the lender can add a penalty or sell off your valuables to cover up their losses due to the loan.