Gold loans is a loan that a person takes by pledges the gold as collateral with banks and financial institutions. There are many secured and unsecured loans are available in the market to choose from. Every loan has a purpose to accomplish. For example, if you are taking a car loan then you have to buy a car, if you are taking a house loan then you have to buy a house to show in bank records. Because a particular loan comes with a particular target. But the gold loan is a type of secured loan in which funds can be used for any purpose. Whether you want to go on a vacation, want to pay a large number of your child’s fees, have to pay a large medical bill, and so on. Gold loan funds can be used for many purposes. Gold loans have many advantages like minimum documentation required, short to long term tenures, is a secure loan, a short time for processing, lower interest rates, etc. Banks and financial institutions offer many schemes that you can avail of by doing comparisons on the basis of different features. The amount of loan you will get depends upon the quantity of gold you have pledged. Earlier you were able to avail of the loan 0f 75% of the pledged gold. But now according to recent RBI policies, it has increased to 90%. This means you can now get the loan in the amount of 90% of the value of pledged gold. The banks and financial institutions check the purity and quality of gold before providing the loan. The advantage of a gold loan is that the approval of your gold loan does not depend upon your credit score or credit history. So, you do not have to worry about any of these before applying for a gold loan.
Before applying for a Gold loan, the following things should be kept in mind:
Gold loan tenure can vary from a few days to 5 years. So before applying for it a person should decide how much is the requirement and what is the repayment capacity of the person.
Gold loan interest is usually less in comparison to any other loan. But it can vary from bank to bank. So a person should do a proper comparison before applying for a gold loan.
All type of gold jewelry and ornaments and coins or gold in any type is acceptable by NBFCs like Muthoot Finance Gold Loans, SBI Gold Loan, etc. So you must decide first which piece of gold possess by you is suitable to apply for a sufficient gold loan.
Repaying gold loan installments on time can improve your credit score and save you from the situations like seizing of your gold by NBFCs.
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