What is a gold loan?
Gold loan is a type of secured personal loan where you give your personal gold items to the bank, NBFC or any other loaning party and they lend you money in exchange for it. The loan amount along with the agreed upon interest rate is to be repaid in small installments. Gold loans are usually short-term loans and the repayment period can range from one month to a year depending on the lender. After the repayment of the loan amount you can get your gold items back in possession. In short it is a type of loan where you transfer the possession of your gold to a bank or a lender in exchange of money for a specified period of time. The loan amount received in exchange is usually 70-75% of the value of your gold item but every lender offers a different amount.
Advantages of Gold loan:
The interest rate charged on the loan amount is usually low but different lenders offer different gold loan interest rate. The lower the amount of your loan the lower will be your interest rate whereas if you want to borrow a higher amount the interest rate will be higher too. Which means that interest rates are lower If the loan amount is around 50-60% of the value of gold. You’ll have to pay a higher rate of interest if you want to borrow money close to the value of the gold.
Gold loans are pretty easy to get and do not require a lot of documents. You do not need to worry about your Credit score or income proof while getting a gold loan. The only documents required is a Valid ID proof and Address proof to get gold loan. In India, a lot of Banks likes ICICI Gold Loan and NBFCs offer gold loans. You can also get a gold loan online through official websites and applications of the lenders.
Things to remember while deciding on a gold loan
With no complicated procedures and easy availability gold loans are one of the best methods to get money in exchange of collateral. However, you need to keep certain things in mind while deciding to take a gold loan. You should do proper research about the status of the lenders. A working knowledge of different benefits and interest rates offered by different lenders is very important in order to get the best out of your resources.
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