Gold has been gaining tremendous popularity among borrowers in India. With the increasing value of gold in the market, borrowers use this opportunity to manage their finances without touching their savings. So, if you have gold jewellery, you can pledge it as collateral and access funds to meet all your financial needs.
A gold loan is a secured loan that serves multiple purposes, which means that you can use the loan amount to pay for a medical emergency, education, wedding, travel, home renovation, etc. The lender does not restrict how you use the sanctioned loan amount. The loan amount is offered based on the gold loan per gram rate. The higher the value of gold in the market, the higher would be the loan amount. It is worth noting that you can only access up to 75% of the value of gold as a loan.
Reasons behind gold loan’s popularity
Getting a gold loan is easy and convenient. If you have legal possession of gold, you can use it to access funds to meet your financial requirements. Before submitting your application, you must determine your affordability through a gold loan interest rate calculator.
Here are the reasons to get a gold loan:
- Easy application process
Getting a gold loan is the most convenient way of accessing funds. All you have to do is give your gold jewellery to your lender and submit the relevant documents. The best part is that there is no lengthy documentation involved. You will only have to submit your KYC documents (identification and address proof) and PAN Card.
- Quick disbursal
Due to minimum documentation, you can get a gold loan on a per gram basis within just a few hours. After submitting your gold, the lender will assess your gold items and determine a loan amount with an interest rate. After getting approved, you will receive the loan amount into your bank account within just hours.
- Maximum loan amount
With the high value of gold in the market, you can secure a maximum loan amount. Depending on your gold items, you can secure up to Rs. 1 crore as a loan. Keep in mind that you can access only up to 75% of your gold’s value as a loan.
- Serves multiple purposes
The best thing about a gold loan is that it serves multiple purposes, which means that you can use the sanctioned loan amount for whatever reason you want. You can use the sanctioned loan amount to pay for a medical emergency, education, wedding, home renovation, car repair, etc. The lender does not restrict how you can use the loan amount.
- Affordable interest rate
Compared to unsecured loans in the market, the gold loan interest rates are affordable. It can start from as low as 10% and go up to 15% depending on factors, such as age, income, current financial obligations, etc. To secure a lower interest rate, you must convince your lender that you have a high repayment capacity with a healthy credit score. Also, you can use a gold loan interest rate calculator to figure an interest rate that best serves your needs.
- Flexible loan tenure
While applying for a gold loan, you can opt for a repayment tenure that generally ranges from 6 months to 36 months. You have ample time to repay your loan amount without hurting your monthly budget. The gold loan tenure has a direct impact on your interest rate. If you choose a higher loan tenure, your interest rate will also increase. So, while applying for a gold loan, make sure to assess your financial situation to make an informed decision.
- Get a loan with a lower credit score
Another benefit of a gold loan is that you can access the loan amount of your choice without the need to maintain a healthy credit score. Since you are giving your gold jewellery as collateral, you do not have to worry about having a low credit score. However, if you wish to secure a lower interest rate, you will have to show an excellent credit score. The minimum requirement is 750.
- Minimum charges
The gold loan per gram interest rate is not the only cost involved in your loan application. There are other charges, such as processing fees and foreclosure charges. Depending on your lender, you may have to incur a processing fee that ranges between 1% to 2%. You can also foreclose your gold loan without incurring any foreclosure charges.
So, if you need funds to meet an immediate financial requirement, a gold loan is the best way to manage your finances without dipping into your savings. However, before submitting your application, you must use the gold loan interest rate calculator to determine your affordability.