How A Gold Loan Could Be Beneficial For A Variety Of Purposes
Explore the advantages of gold loans in India. A versatile solution for financial needs, from starting a business to funding education and emergencies
Sometimes, unexpected expenses or planned investments can exceed the available funds in our bank accounts. Whether it's a medical emergency, additional costs for a vacation, college tuition, a wedding, or business payments, we often need a feasible solution. That solution is a Gold Loan. Whether for emergencies or planned expenses, a Gold Loan provides a common solution to bridge the financial gap and securely fulfill multiple needs.
What Is A Gold loan?In India, a gold loan is a secured loan where the borrower pledges their gold jewellery as collateral. It is a popular choice for individuals who need quick funds but need other forms of collateral. Gold loans generally offer lower interest rates compared to unsecured loans. While local moneylenders used to provide such loans against gold earlier, now banks, NBFCs and dedicated gold loan companies offer this type of debt product.
How Is Gold Loan An All Purpose Loan?
The gold loan is widely regarded as the most efficient borrowing option due to its attractive features like low-interest rates and no usage restrictions. While personal loans offer flexibility, they often come with borrowing limits that may only cover some needs. In contrast, a gold loan can provide a higher loan value based on the weight of the gold offered as collateral. Notably, gold loans come with significantly lower interest rates than personal loans. Small business owners can even utilize gold loans for their business needs, replacing the need for unsecured business loans, especially when their business is in its early stages and doesn't meet the requirements for traditional business loans. Gold loans offer a viable solution for fulfilling business requirements.
Gold loan benefits can very well be experienced as an alternative for the following loan types-
Loan For Startup or MSME Businesses-A gold loan may cover working capital requirements for a business. A gold loan is the best way to raise capital to fund the start of a new business or to pay for ongoing operating expenses due to the high LTV and competitive interest rates. LTV here is the ratio that represents how much loan we can get in terms of percentage of the total value of the gold asset. Gold loans provide a fantastic opportunity for women and young entrepreneurs from rural areas to turn their ideas and ambitions into lucrative businesses.
Loan For Education-Many financial institutions provide loans for higher education in India and overseas. But, the educational institution's eligibility for a student loan is a crucial caveat, as banks often only provide loans for admission to top-tier colleges. In this case, due to their secured nature, gold loans give a competitive alternative to student loans with no end-use limitations and minimal qualifying requirements.
Loan For Medical Emergencies-Most medical emergencies happen without warning. But using the gold collecting dust in your home instead of spending all your hard-earned money is a wise financial move. Instant gold loans are an excellent option for various medical emergencies because of their simple application process, rapid processing, and prompt disbursal.
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Loan For Miscellaneous Purposes-Gold loan is a natural fit for a variety of expenses such as home renovation, large-ticket purchases, exotic holidays, and more due to the comparatively low-interest rates and the unrestricted use of the loan amount.
Loan For Agricultural Purposes-Farmers often need help securing loans from banks due to insufficient collateral or poor credit history. However, they can meet various agricultural needs, such as purchasing land, machinery, irrigation equipment, and raw materials and improving inventory through gold loans. These loans provide a quick and uncomplicated financial solution. Financial institutions offer agriculture gold loans with annual interest rates starting from 7%. The interest rate, however, may vary in terms of eligibility criteria, repayment terms, and associated charges.
How Can I Get A Gold Loan?
Gold loans are gaining popularity in India because of the various benefits of taking gold loans. It has a hassle-free end-to-end procedure both offline and online, minimal documentation, competitive interest rates, security, short tenure, flexible repayment options, no reliance on CIBIL or credit score and quick disbursal. To get a gold loan, you need to-
Approach the lender's office for an offline application form or complete an online one on the lender's website.
Then, submit an identity proof, which can be an Aadhar card, PAN Card, Passport copy or Voter ID, and provide your address proof, which can be an Aadhar card, Passport, Driver's license, Rent agreement or electricity bill.
After the document verification and application form submission, the lender will evaluate your gold to fix the gold loan amount, interest rate and tenure. Here,
The gold loan amount can be up to 75% of the gold value
Gold will be valued basis of the per gram rate that varies with the current market rate, the weight of the gold asset and the purity
The gold assets should at least have a purity of 18 karats
Once the verification is done, the loan is sanctioned and disbursed to your account quickly.
Conclusion:Now that you know how easily accessible a gold loan is, give your business the opportunity boost, go on that vacation, pay the fees without dipping into your savings and arrange that dreamy wedding just by using your gold asset and availing the funds with gold loans. And, to get the whole process done more quickly, safely, and in the comfort of your home with a trusted name, choose IIFL Finance and its Gold Loan at Home service. Apply for a gold loan and make the smart financial move today.
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