When you hear less it always excites you and you ought to buy the product. It is a human instinct to divert our attention to that thing that comes easy, cheap, and faster. Our mind is stuck to it as it gives an add-on satisfaction. Similarly is the case with Gold Loan.
Features of Gold Loans:-
Loan Amount: With most banks, there is no maximum limit on a gold loan; you can mortgage as many gold articles you have to get the loan.
Tenure: The minimum tenure on a gold loan may start from 3 to 6 months for the customer. The maximum tenure offered on a Gold Loan is 4 years.
Interest Rate: The interest rate on a gold loan usually starts from 10.50% onwards, and it can go up to 19%. However, the interest rates are still higher when you mortgage your gold with NBFCs and private lenders who provide financial help.
Collateral: The gold loan per gram acts as the collateral and will be retained by the lender until your loan is complete. If there are continuous defaults and errors by the customer, the gold will be auctioned by the lender to recover the losses on their end.
Prepayment: The customer can have the option to pre-close the loan before the tenure ends. Most NBFCs do not charge any kind of fee for preclosure. Whereas, the banks charge a certain percentage of the loan amount as a prepayment penalty.
Processing Fees: Some of the banks waive off the processing fees to attract customer's attention. While most banks levy a processing fee of a certain percentage of the loan amount. It could range between 0.50% and 2%, and GST is applicable along with the processing fee of the bank.
Late Payment: Late payment on a gold loan can cost you more and it is counted as a default. The bank may charge a certain fee for late payment. The amount of fee varies from bank to bank. It is generally up to 2% p. a. over and above the applicable rate of interest decided by the bank.
Why are gold loans better than personal loans?
- Let’s for example consider a situation wherein you need money for a sudden financial emergency and your loan is approved by the bank. At the same time, you have sufficient gold ornaments that are idle in your house. In that situation what would you prefer?
The best decision would be to go for a gold loan. You stand to lose nothing but save a lot of money. Allahabad Bank gold loan is the leading bank with an interest rate of(10.70 – 11.40
%). The following table will help you understand better about the situation.
As the interest rates in gold loans are lower than a personal loan, you can save a considerable amount of money which can help you for future benefit. Apart from that, a gold loan is processed at a faster rate, and the loan amount is funded within a day. A personal loan can take more time as it involves a longer documentation procedure than a gold loan which can leave you in dilemma and confusion at the hour of an immediate emergency. If you are worried about the gold which is placed in the house.
They will provide high-security lockers for your asset and it will be way safer than inside your house. Rather than waiting in line for hours, it's easier and faster than any other way of securing a loan. Therefore it makes it stand out in the case of immediate emergencies. Gold Loan is one such loan that is easily available without any rigorous steps to follow or any extra documentation is required once you and the bank are satisfied with the standard criteria set forward before funding the customer with financial help.
Conclusion:- Lastly, the better option for you if you are willing to take the loan with minimal documentation and a speedy money option. Choosing the gold loan will make your things more effective and worthy.
Also Read:- Highest tenure for Gold loan
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