The financial emergency can come anytime without any prior warning. To tackle such emergencies you often need a pool of funds. You can always take a personal loan from any lender in our country. But when it comes to gold loans it is an easier option to go for. It does not require a bunch of paperwork and a lot of time to get approval.
A gold loan is a secured loan type, where the borrower pledges his/ her gold with the lending institutions (banks/ non-banking financial companies).
A gold loan or loan against gold is a secured loan in which a customer pledges his/her gold and submits the KYC documents to avail of a gold loan.
One can get a gold loan by 75% of the market value of the net weight of the gold ornaments (as per the RBI guidelines) excluding stones attached to ornaments, whichever is less. The weight of coins pledged should not exceed 50 grams per borrower.
This loan is a good option if you are looking for instant liquidity. Also, since the approval of this loan does not depend upon your credit history or income, you need not worry about adversely impacting your credit score nor scramble for income proofs for loan approval.
It is a secured loan, therefore you need not need a good credit history to avail this loan. Though it does affect your CIBIL score if repaid on time. Since your gold is the collateral, which is deposited with the lender, the paperwork involved is bare minimum. All you require is your personal ID and address proof. The loan disbursement is fast i.e. it can be as short as 5 minutes.
Most gold loan providers charge only a small percentage, usually 3-5% over the base rate when providing a gold loan. Thus for a base rate of 10% the interest on a gold loan can vary from 13-15% per annum. Gold loans feature a tenure that ranges from a few days to 5 years.
Since it is a kind of personal loan but in secured type, there are no boundaries for where you can invest money in.
Since the pandemic lockdown, there has been a high rise in demand for gold loans by small businessmen, traders, shopkeepers, etc. It is an easy way to get cash too with a low-interest rate and tenure of your choice.
It is in high demand since the lockdown has taken a step back and everything has started to open. A gold loan is the easiest option to give your business a kickstart again.
Hence to conclude that getting a gold loan for your business is a very good option for those looking for a short tenure with low Gold loan interest rates.
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