When stuck with a financial dilemma we often consider applying for a personal loan. But a personal loan can add on to your financial distress due to a higher rate of interest. Opting for gold loan may prove to be an affordable option in such a situation.
What is gold loan?
A system where you can get a loan by pledging your gold. Gold loans are mainly provided by banks or NBFC’s wherein the purity of the golf should be 18-24 carats.
Why avail a gold loan?
Low interest rate: in case of a gold loan, the physical gold can be kept as the collateral. This means you can avail lower interest rate. Also, the loan processing takes lesser time.
No credit history: For a gold loan only the gold collateral matters as the banks do not ask for employment status, income proof or check credit history for sanctioning gold loan.
High Margin: The lender provides up to 75% of the value of gold, pledged for the loan.
Easy repayment: You can pay only the interest amount during the loan tenure. The principal can be paid in a lumpsum at the end of the tenure.
Key features of gold loan:
- Physical gold ornaments and gold bullion are accepted by banks and NBFCs as collateral assets.
- A gold loan is can be easily availed by anyone who has gold at their disposal.
- The loans are quickly processed and the loan gets sanctioned within an hour.
- It comes with a highly flexible tenure which is fixed depending on the loan amount sanctioned.
- The interest rate of gold loans ranges from 10.5%-16% along with processing fee of 2%.