The Golden Benefits of Gold Loans: How This Form of Borrowing Can Help Meet Your Financial Goals

Indians are recognised around the globe for their love of gold. Gold is seen to have substantial worth and the potential for future wealth appreciation. Yet, many people are unaware that gold may also be utilised to support essential financial needs, such as medical costs, children’s education, company setup, down payment for car purchases, and even yearly family vacations.

As there are many Gold Loan benefits and When you find yourself in a position where you need money quickly, you may use the gold in your bank locker. Several banks and non-banking financial organisations (NBFCs) now provide gold loans. When there is a need for immediate cash, these loans might come in helpful and can be obtained easily. You may acquire a loan against jewellery, gold coins, and bars.

What are the benefits of gold loan?

The following are some of the primary gold loan benefits:

Fast Processing: Since gold loans use actual gold as security, banks and other lending organisations may make such loans quickly. Lending against gold is safer for banks since they can readily sell it if the borrower fails. This leads to a shorter processing period and more convenience for borrowers.

‘Pay Interest Only’ Option: Several gold loans have a unique feature that enables the borrower to pay just the interest component when repaying the loan. The primary component might be paid at the end of the loan term or during the loan closing process.

Reduced Interest Rates: Since gold loans are secured loans, banks offer lower interest rates than unsecured loans such as personal loans. The interest rates for gold loans vary between 13 and 14%. The bank reduces the interest rate on gold loans for borrowers who can supply more collateral.

Low Foreclosure Fees: Some banks and lenders do not charge or impose a 1% prepayment fee on gold loans.

Income Evidence Is Not Required: Since the loan is secured against the gold promised by the borrower, most lenders do not need income verification from borrowers.

No Effect of Bad Credit History: In most loans, the bank approves loan amounts based on the borrower’s repayment potential and credit history. This is not the case with gold loans. When gold is used as collateral, lenders are certain of repayment of the main component and do not depend on the borrower’s credit history before providing the loan.

Physical Gold Security: The lender must keep the physical gold secure. Borrowers should not be concerned since it is generally stored securely in the bank’s vault. The bank returns the gold after they repay the loan.

Who may apply for a Gold Loan?

You may use the Gold Loan eligibility calculator to determine your eligibility and You may avail loan against jewellery, gold coins etc.

Here are a few things to consider while asking for a gold loan:

  1. Determine the true value of your gold. Verify the purity and weight of your gold before approaching a lender to guarantee you are not being taken advantage of.
  2. Determine the market gold rate for the day to ensure you have the correct LTV (Loan to Value) ratio when calculating your loan amount.
  3. Ensure that you are dealing with a reputable lender to protect the safety of your gold investments.

What documentation is required to apply for a Gold Loan?

If you want to apply for a Loan against Gold with HDFC Bank, you will need the following documents:

One passport-sized photo

PAN (Permanent Account Number) Card (in conjunction with any of the following)

referred to papers) or Form 60

Passport (Not expired) (Not expired)

Driver’s licence (Not expired)

Voter Identification Card

UIDAI issues Aadhar Cards

Documentation of Agri-Allied Occupation ( in case of bullet repayment for agriculture customers)

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