Many types of loans and schemes are available in banking or financial institutions. And we also know that there are people who love gold so much. So now, if you are in a financially tight situation, you should try to take some loan against gold in any bank or financial institution.
As gold is a physical property, banks and other financial institutes easily loan you. Taking a gold loan in a bank is so easy as the bank gets the feeling of safety in the gold loan because if a loan taker fails to repay the money in a given time, they need not worry and put that gold in auction and may get the expected money back. So, banks approve gold loans faster than any other loans. Hence this is a fast processing scheme in every bank.
‘Pay Interest Only’ Option
The gold loan has special features compared to any other loan, which is the loan taken could repay only the interest while repaying. You can pay the principal amount at the end of the term or before the closure.
Comparatively Lower Interest Rate
Gold loans are secured loans for the banks because they have the option to auction the jewellery to get the money back if the loan taker fails to repay, so they give you gold loans at very low-interest rates compared to other personal loans or any other loans that banks offer. 13 -14% is the avg interest rates in any bank.
But loans such as personal loans have interest rates of 15% on average. If the loan taker can lend any other security other than gold, the interest rate may even become lower than usual.
P.S Gold interest rates are always lower than personal loans.
Zero Processing Fees
Most banks and NBFCs do not ask for any processing fees since gold loans are provided instantly with gold as security held by the bank.
Minimal Foreclosure Charges
Some banks and financial institution givers don’t charge prepayment charges, or some may have minimal prepayment charges of 1% on gold loans.
No-income Proof to be Furnished
One of the special things about taking a gold loan is you don’t need to submit your income proof or any other verification that lenders won’t ask about your income. It’s because banks have security, which is gold; if you don’t repay, you know what they will do.
No Impact of Poor Credit History
For every other loan and scheme in the bank, they ask for a good credit score and check your credit history to give you a loan, whereas for taking gold loans, they won’t see or ask such things. And why? Because you know they have your precious gold. By giving your jewellery to the bank or any other financial institute, you assure the loan giver that you will surely repay them.
Security of Physical Gold
After you give your jewellery and take your loan, it becomes the loan giver’s responsibility to take care of your gold. They would usually keep it in a vault safely secured. So borrowers need not worry about gold after taking a gold loan. As soon as you repay the loan taken again, the gold is going to be yours; that is, the bank or any financial institute will return your gold safely.
As we know, gold loans are extremely quick to avail. But In the case of gold loans, we don’t get proof from the bank that our gold is secure in a vault. The bank will have safety as they have the gold as security if the individual doesn’t repay.
But, you don’t get any proof from the bank or loan provider which issues the jewellery safety. So before you start to decide whether you should take jewellery or not, decide which bank or lender you will take the gold loan from. You must take a gold loan from a very good and reputable bank or financial institute to safeguard your jewellery in the vault. Check for good banks around your area, or it is even better to ask your friends or neighbours or even work colleagues for suggesting you a very good bank or financial institute.
After comparing all the factors like safeness and interest rates, all go for it. Don’t be careless in this because you’re going to take a loan against gold, so check for the bank’s trustworthiness or any other financial institutes. Because there are many scammers out there, so don’t fall into the trap.