A gold loan is availed by pledging your gold ornaments. Gold carries a significant monetary value throughout the world. A gold loan can help overcome monetary needs in times of financial difficulties. The immediate financial requirement may arise during a medical emergency, to pay off tuition fees, for business needs etc. The sanction process for a gold loan is seamless and fast since it requires minimal documentation.
Below are some of the key reasons one should consider while opting for a gold loan.
1. Processing Time
In times of financial emergency, raising money in short time is the prime objective. Availing loans such as personal loan or loan against insurance policies etc requires some amount of time, documentation supporting income proof, submission of policies/certificates etc. As compared to such loans a gold loan is beneficial. Gold acts as collateral to banks and valued at market rate (IBJA) and can be sanctioned immediately. Hence they act as an instant loan. A quick gold loan is a secured form of loan because the collateral is in the form of gold.
2. Low Interest Rates
Compared to a personal loan or a business loan, the interest rates offered by banks on gold loan are lower. Some banks may offer high loan to value depending on the internal policies. Interest on gold loan is lower as compared to other loans since they are secured by collaterals in the form of gold ornaments. An easy gold loan is hence perceived as a quick loan with low rate of interest.
3. Loan Repayment Options
Various repayment options are available to pay off the loan amount as per the internal policies of respective bank. You can pay off the loan amount in one go at the end of your tenure, or choose the option of regular EMIs. Some lenders also let you defer the entire principal amount to the end of the term and let you pay only the interest amount during your tenure. Other benefits include flexibility and options for shorter loan tenures. Karnataka Bank’s Gold Loan offers simple processing and various repayment options such as Term repayment, Overdraft, and Bullet repayment.
4. Easy Documentation Process
Business loans and personal loans may require documents to support your income, repayment capability etc in order to avail the loans. You are required to submit these documents and the loan appraisal process has to be fulfilled which is time-consuming. When in urgent need of funds such a turnaround time may matter considerably. Here a gold loan can come in handy. The documents required for a fast gold loan are minimal compared to other kinds of loans.
5. Online Loan Amount Calculators
Online calculators help you figure out what amount of loan you can avail based on your gold. You can calculate the loan amount by entering the weight of the gold in grams and the purity of the gold in carats. Calculating the gold amount can help you save time. Instead of going to the bank, you can now check the eligible loan amount from the comfort of your home. One crucial thing to keep in mind is that the price of gold varies every day, so the calculators use the value of the gold of that particular day.
Something to keep in mind while applying for a gold loan is the purity of the gold that you are putting up as collateral. The higher the purity of the gold, the higher the loan amount you will receive. The minimum purity expected by banks and lenders is 18 carats. The amount of loan you can avail against your gold differs for each bank and lender but it is known that you can get up to 90% of the value of the loan amount depending on the internal policies of the respective lender. Obtaining a gold loan is one of the easiest and quickest ways to obtain funds in financial emergencies.