Why Are Gold Loans Considered The Best Option In A Cash Crisis

Find out why gold loans are the best option in times of crisis. Easy availability, minimal documentation, and lower interest rates explained.

6 Jul,2023 11:04 IST 1870
Why Are Gold Loans Considered The Best Option In A Cash Crisis

The easiest method to manage your finances is to keep your spending within your means and steer clear of debt. Creating an emergency fund, in addition, is a must so that you have money on hand to cover unforeseen expenses. Sometimes, even when you have a thorough financial plan and have saved and invested wisely, you may still need financial help and need to borrow money.

Emergencies can happen at any time. Most of us frequently turn to loans in these circumstances to cover the unexpected need. Gold loans are the ideal solution for instant finance in such situations, whatever the reason. Many Indian households own gold in some form or the other. A large percentage of this is unutilised. Therefore, one of the best financial choices in an emergency is to apply for a gold loan.

Here are some of the top reasons why you need to apply for a gold loan in times of crisis:

Easy Availability:

Gold loans are best compared to other sorts of loans as they are simple to obtain and can be handled swiftly. To get funds during a cash crunch, the immediate need is furnishing gold jewellery or ornaments as security.

Minimal Documentation:

The lender mainly confirms the legitimacy and worth of the gold that is being committed. Due to the shortened process, obtaining the loan takes less time and work, which makes it a practical option for those with pressing financial needs.
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No Credit History Required:

Gold loans are secured against the collateral (gold), as opposed to conventional loans, which mainly rely on a person's credit history and ability to repay. Therefore, lenders care less about your creditworthiness. Therefore, those with poor credit can still qualify for gold loans.

Lower Interest Rates:

Compared to unsecured loans like credit cards and personal loans, gold loans interest rates are often lower. The loan-to-value (LTV) ratio, or the portion of the gold's worth that can be borrowed, is typically used to establish the gold loan rate of interest. Due to the risk that collateral reduces for the lender, you benefit from lower gold loan interest rates.

Flexible Repayment Options:

You can choose a tenure that suits your financial situation. Depending on the lender, you may repay the principal and interest in regular installments or make a lump-sum payment at the end of the loan tenure.

Asset Preservation:

Due to sentimental value or potential long-term investment returns, many hesitate to sell their gold jewellery during a financial crisis. You can utilise your gold as collateral by choosing a gold loan while keeping ownership. The gold given as security for the loan is returned to you after repayment.

Conclusion:

The money obtained when pledging gold can be utilised for nearly anything. Because of this, it is among the most fantastic means of funding in times of need, whether for a family or personal disaster. A word of caution, though. Whenever you are considering applying for a gold loan, it is highly advisable to approach a trusted name like IIFL Finance. They have one of the best gold loans, offering a very streamlined process with minimal documentation and no hidden charges whatsoever. Moreover, they even provide the exclusive service of a Gold Loan at the doorstep, wherein the representative visits your home to evaluate the gold and process your application.
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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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