Why Investing In Gold Loan Can Be Wise

Gold loans are a perfect solution for unforeseen financial burdens. Read on to know why investing in gold loan can be a wise choice!

9 Oct,2022 10:49 IST 26 views
Why Investing In Gold Loan Can Be Wise

Gold is symbolic of prosperity. History advocates that people holding relatively enormous amounts of gold and jewels had a reputable societal position. Gradually, gold gained traction as a crisis fund. The benefit of investing is that one can withdraw it in an emergency.

A few decades ago, selling was the only way to leverage gold during financial turbulence. Now, among all the options, the best way to use your crisis fund and keep the asset secured at the same time is a gold loan. This blog discusses why it is wise to invest in a gold loan and will help you decide whether you should apply for a gold loan or not.

Benefits Offered By Gold Loans

The term ‘loan’ is often intimidating. However, gold loans are a perfect solution for unforeseen financial burdens. Undeniably, gold loans are better than any other loan available in the market for numerous reasons. Let's understand the benefits of a gold loan investment.

Gold Loan Interest Rates Are Competitive Over Other Loans

Gold loans are secured loans offering comparatively lower interest rates. However, unsecured loans do not have high-value collateral. Thus, the interest rates are high. If you consider a gold loan vs a personal loan, which is unsecured, the interest rate starts at 7% for the former and 14% for the latter. However, the gold loan interest rates vary depending upon the banks or the respective non-banking financial institutions.

Various EMI Options Are Available

Gold loans come with the massive advantage of multiple loan payment schemes. Any individual or business can go with the traditional (Equated Monthly installment ) EMI plan, bullet system, partial payment system, or pay monthly interest and principal at the end of the tenure.

• EMI System:

This option is a monthly installment scheme, including interest rates and principal. The lender sets the EMI calendar after the loan approval.

• Bullet System:

The borrower can pay the entire loan and interest in one shot. Lenders set the payment schedule at the time of loan approval. In the bullet system, people usually pay at the end of their tenure.

• Partial Payment System:

The borrower can ditch the EMI schedule and pay half the loan amount at any time. People who choose this option should ensure they pay the entire loan amount at the end of the loan tenure.

• Interest Now, Pay Principal Later, System:

In this system, lenders charge interest according to the EMI schedule. The highlight of this system is that the borrower can pay the principal amount after the loan term is up.

Quick And Easy Loan Approval

Getting approval is always hectic, regardless of the loan type. However, the loan approval process for gold loans is simple. Lenders giving gold loans will not check your credit score. There is no investigation into your repayment capacity. They will not even check whether you are earning a regular income. With gold as collateral, lenders do not require investigating your financial background further.

Low Gold Loan Interest Rate

For financial institutions, loan repayment is easier if the collateral is higher. The lender will settle the loan using higher collateral if the borrower defaults.

Immediate Solution During The Crisis

Gold loans are easy to get. The processing time depends on the purity and weight test of the gold. Once the lender determines the weight and purity, they process the loan. The loan amount offered for the same gold piece can vary depending upon the interest rates.

Safeguards The Asset While Aiding Financially

The lender keeps the gold as collateral and returns it once the borrower has completely repaid the loan amount. Your gold assets are stored in a maximum security vault to ensure comprehensive safety. Some lenders insure your assets in the rare event of a robbery.

Get Your Gold Loan Through IIFL Finance

If it’s a gold loan, it’s with IIFL Finance. You can apply for gold loans online or at the nearest IIFL Finance location to examine the rates.

From application through disbursement, the entire process is online. The disbursals take a few hours if the purity check on your gold products is successful. You can fulfill your requirements in this way and reimburse them each cycle. Obtain a gold loan from IIFL Finance right away!

FAQs

Q1. How much credit can I receive for 1g of gold?
Ans. You are entitled to a gold loan of Rs. 2,700 per gram of gold if you take out a loan against 18-carat gold. If you take out a loan against 22-carat gold, the per-gram rate is Rs. 3,329 per gram. However, these rates vary as they depend on various market conditions and the lender itself.

Q2. Who can apply for a gold loan?
Ans. You must be between 18 and 65 age to be eligible for a gold loan. The loan repayment period is one of the eligibility requirements for Gold Loans.

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