Merits And Demerits Of A Gold Loan

Check merits and demerit of gold loan before taking a gold loan, you must understand everything about it. Read on to know the gold loan procedure, advantages and disadvantages of gold loan in detail at IIFL Finance.

28 Oct,2022 19:11 IST 224
What Are The Procedure, Merits And Demerits Of A Gold Loan?

Throughout life, everyone covers numerous personal or business expenses sooner or later. Either you can cover such expenses using your hard-earned savings or raise external capital and repay it steadily over time. Most individuals prefer the second option as they don’t have to spend much of their savings to cover recurring expenses.

If you own gold ornaments, you can easily avail yourself of a loan from a lender. However, before taking a gold loan, you must understand the procedure, gold loan advantages and demerits of a gold loan.

The Process Of A Gold Loan

The gold loan process includes the following steps.

• Choosing A Lender:

You need to choose a lender that offers many options with attractive and affordable gold loan interest rates and flexible repayment options.

• Application Form:

Fill out the gold loan application form by entering your personal information and submitting the application form. While visiting the branch to pledge gold you have to bring the relevant gold loan document

• Pledge Assets:

Once you pledge your gold asset, the lender will analyse the current value of the metal and offer you a certain percentage of the total value as the loan amount.

• Approval and Disbursal:

Once the lender successfully reviews the application form, they approve the loan within 5 minutes and disburse it into the bank account within 30 minutes.

Gold Loan Advantages and Disadvantages

The disadvantages and advantages of gold loans include the following.

Advantages

• Immediate Capital:

A loan against gold offers funds within 30 minutes of application approval into the borrower's bank account, thereby providing quick capital.
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• No External Collateral:

Unlike other loan products, gold loan do not require pledging a valuable asset such as real estate as collateral. The lender requires gold assets only.

• No End-Use Restrictions:

You do not need to justify each expense to the lender. You have complete freedom to use the loan amount for any purpose.

Disadvantages:

• Fluctuating Prices:

Gold prices fluctuate regularly, resulting in lesser value for the gold, higher interest rates and a lower offer as the gold loan amount.

• Security:

You have to pledge the gold ornaments as collateral with the lender until complete repayment of the loan. If the lender is not reputed or experienced, you could risk losing your gold to theft.

• Prepayment:

The lender may ask you to repay the entire outstanding amount in a single EMI if the value of the gold falls sharply in the domestic market. This factor may increase the chances of default or create a financial burden.

Avail Of An Ideal Gold Loan With IIFL Finance

IIFL Finance is India’s leading financial services provider offering customised and comprehensive gold loans. The benefits of gold loan are multiple as you get industry-best benefits through our process designed to offer instant funds based on the value of your gold within short time of application. IIFL Finance Gold Loans include the lowest charges, making it the most affordable loan scheme available.

FAQs:

Q.1: What are the interest rates on IIFL Finance Gold Loans?
Ans: The interest rates on IIFL Finance gold loans are between according to the market.

Q.2: How much time does it take for the disbursal of the loan?
Ans: The loan amount is credited directly into your bank account  after the loan approval.

Q.3: What is the gold loan tenure of IIFL Finance gold loan?
Ans: The maximum loan tenure is 24 months at IIFL Finance

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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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