How Much Gold Is Required For Gold Loan?
To find the gold loan amount you need, you will need to calculate how much gold your item is worth. Read this article by IIFL Finance to know more!
For centuries, Indians have been investing in gold for auspicious reasons and because the yellow metal is a major form of investment that can help one tide over bad times. The gold jewellery lying at home or in bank lockers can be mortgaged during tough times to borrow money.
Indeed, a gold loan can be a perfect option for funding a child’s higher education, emergency medical expenses and even for buying a luxury item. It involves a quick and straightforward process to obtain funds.What helps gold loans gain an edge over personal loans is that the interest rates on gold loans is much lower than the rates on personal loans and other unsecured debts. For borrowers with additional collateral, the interest rates are further reduced by the bank. Some other benefits of taking a gold loan are:
• Quick Processing:Most lenders easily provide gold loans because the pledged physical gold serves as the collateral. This results in a lesser processing time. For lenders it is a safer option as they can easily sell the gold in case the borrower defaults. So, banks and NBFCs disburse such loans within a few hours.
• No Processing Fees:Many banks and NBFCs do not charge any processing fees.
• No Impact Of Credit Score:Individuals with poor credit history and unstable employment track record can apply for a gold loan as long as they have gold to pledge.
• Minimal Foreclosure Charges:While some banks and lenders do not charge extra in case of prepayment of the loan, some others have minimal charges of 1% on gold loans.
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• No Income Proof Required:To apply for a gold loan borrowers need to furnish essential documents like identity proof and address proof. Because a gold loan is a secured form of loan, lenders do not ask for income proof from borrowers.
• Flexible Repayment Options:Gold loans often come with unique repayment features in which the borrower only pays the interest component while repaying the loan. The principal component can be paid at the end of loan tenure or during closure formalities of the loan.
What Type Of Gold Can Be Pledged?
Banks and non-banking finance companies consider the purity of the gold before sanctioning a loan application. Usually, each lender has a specific procedure to assess the value of the gold pledged.
The higher the purity of the gold, the higher will be the valuation amount.
Also, the weight of the gold only is considered for a gold loan, which means the value of the gems or precious stones set into the gold jewellery is not taken into account in deciding the loan amount.
Some lenders require an applicant to have a minimum of 10 grams of gold to avail a gold loan, but many non-bank lenders don’t have this requirement. Apart from the purity and the weight of the gold, the valuation of the gold depends on the rate of gold on that particular day.
Gold is a symbol of wealth and prosperity. Physical gold can be used to take out gold loans by borrowers to meet various expenses. A gold loan is a better option as compared to a personal loan, especially if a borrower repays the loan over a shorter duration.
Availing a gold loan is easy. All a borrower needs to do is to walk to a lender’s showroom or log into their website and pledge the gold in return for money. But there are certain things that borrowers must be aware of before applying for a gold loan.
It is good to approach trusted gold loan providers for complete safety of the gold assets. IIFL Finance offers complete customer satisfaction when it comes to gold loans. The pledged gold ornaments are securely kept in lockers that are under continuous surveillance.
It is easy to get a gold loan either online or offline with IIFL Finance, one of India’s top NBFCs. IIFL Finance also offers borrowers a simple documentation process and speedy disbursal of loans. Moreover, with no end-usage restrictions, borrowers can use the funds to meet any kind of expenses.
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