GOLD LOANS FOR HOUSE REPAIR

 There are three most feasible ways to finance home repairs and house renovations:

1. Personal Loan

2. Home Improvement Loan

3. Gold Loan

This article intends to list out the advantages of taking a gold loan for home repairs and home renovations instead of going for a personal loan or a home improvement loan.

Reasonable Interest Rates

The Interest rate is the main factor that determines the overall cost of borrowing. Gold loan interest rate depends on the policies of the lending bank or the non-banking financial company and it varies from 11% to 17%. The interest rate that lending organizations charge for a gold loan is reasonable as compared to other loans.

Nominal Processing Fee

The processing fee for a gold loan is from 0.5% to 1% of the total loan amount. 

Tenure- Short-term

An expense like home repairs is a short-term personal expenditure so it is advisable to go for a gold loan for which the tenure can be as short as 6 months and can be extended up to 5 years if required.  

Disbursal Time (Fast and Easy)

A gold loan only requires the borrower to visit the bank or the NBFC with gold assets and basic documentation like identity proof (Aadhaar card, Driver’s license, Passport) and address proof (Phone bills, Electricity Bills). The process takes just 45 minutes to 1 hour to complete formalities like weighing the gold, checking the purity, setting the terms of the loan agreement, determination of the loan amount considering weight and purity, transfer of the loan amount to the borrower’s account, etc.

Eligibility Criterion

The eligibility criteria for gold loan by Canara bank is nominal. The borrower only needs to get the weight and the purity of the gold checked along with an easy documentation process for approval of the gold loan. 

Loan Amount

The loan amount of a gold loan depends on the weight and purity of the gold being pledged by the borrower and can start from 75% and can go up to 95% of the total worth of the gold assets. This is comparatively higher than other types of loans available in the market. 

Tax Benefits to the Borrowers

Gold Loans taken for home repairs and home renovations give tax benefits to the borrower both on the principal and the interest repaid under Section 80C and 24B. 

Waiver of Loan Foreclosure Charges

Some lender banks and non-banking financial companies do not apply foreclosure charges after 3 months and the borrower can repay the whole loan amount after three months without any prepayment penalties. 

Credit Score/ Credit History

There is no requirement of a good credit score or a stable credit history when it comes to taking a gold loan because it involves providing the gold assets to the banks or the non-banking financial company as collateral.

Income Proof

There is no need of providing any proof of income such as a salary slip as the borrower has the option of paying the interest amounts monthly and making the full payment of the principal amount at the end of the loan tenure. 

Conclusion

Gold Loans are fast and easy. The borrower must make sure that the repayment of the loan is done well in time because the bank or the non-banking financial company dealing in gold loans has the liberty to auction the gold assets in the situation of default. In the need of funds for house renovations and repairs, it is highly advisable to go for Gold Loans instead of personal or home improvement loans because Gold Loans hold advantages which are explained above in detail.