Emergencies and need for some cash can come up anytime in life. There may be many factors that could be the reason that you need for cash. It could be something like the current pandemic which has affected the income of many individuals and companies. The worst affected is self-employed.
Some of the other instances may be a medical emergency, meeting expenses for social events like a marriage or a naming ceremony, educational expenses, business expenses, home renovation, etc.
A gold loan may be a good way of getting some extra cash to meet these expenses
What is a Gold Loan?
Gold Loan is a loan availed against the security of gold. You could pledge gold held by you in any form(ornaments, coins or bars) to avail a loan. A gold loan could be used for any purpose that you wish.
Features of a Gold Loan
There are many good features of a gold loan which would be useful for you to know.
Flexible Loan Amount
Depending upon your need, you can avail a gold loan of anywhere from a minimum amount of Rs 10000 to Rs 25 lakh (figures can vary between lenders)
A Good Way of Putting An Asset to Use
We Indians to hoard to gold. It is an integral part of our culture. According to reports, Indian households own around 25000 tonnes of gold cumulatively. Availing a gold loan is a great way of putting this asset to use in times of need.
Is Available Quickly
Gold loan is available against pledging the gold. So, there is no elaborate process involved in allowing a loan other than assessing the quality and value of gold held by you.
Does not Need a Good Credit Score
A gold loan does not require a good credit score as you are pledging your asset for availing the loan. So, a gold loan may be the ideal one, if you are dealing with a low credit score.
Help Improve Credit Score
If you are facing a bad credit score, availing a small gold loan can help you improve your credit score when you pay back your loan on time
Easy Eligibility Criteria
A gold loan can be availed by anyone without meeting eligibility criteria like minimum income or minimal credit score. It can be easily availed even by self-employed individuals.
Availing any kind of loan requires you to submit documentation of sorts depending on the kind of loan. A gold loan requires minimum documentation; the only requirement is for KYC documents and a photograph.
Lower Interest Rate
A gold loan carries a lower rate of interest than other unsecured loans as it is secured by the pledged gold.
Safety of the Pledged Gold
Your gold is held safely by the lenders during the term of the loan.
How Can You Avail a Gold Loan?
The procedure to avail a gold loan is extremely simple. You could follow the below mentioned simple steps to get a gold loan.
Get an idea of the interest rates and other terms and conditions about various gold loan lenders
Approach the lender of your choice with the gold you are looking to pledge.
Get the gold valued by your lender
Once the value is established, you can get a loan for up to 90% of the value of the gold (till Mar 31 Mar 2021) or 75% of the value of the gold.
You would need to pledge the gold with your lender which will be kept in safe custody till the completion of the loan.
The money is disbursed to your account and the EMI for the loan starts
Where Can You Avail a Gold Loan from?
A gold loan can be availed from many banks or NBFCs. There are certain NBFCs who even allow gold loans at your doorsteps. Under this arrangement, the representatives of the NBFC come to your home with the tools required for verifying your gold and allow you a loan on the spot after verification of the gold and your KYC documentation.
Points to Keep in Mind while Availing a Gold Loan
Though it looks very easy to avail a gold loan, there are certain pointers to keep in mind before availing the same.
You can lose your gold if you do not pay back your loan on time.
As the gold is held by the lender, you don’t have a chance to utilise the same in case of a need. This might be a hindrance especially when you have a longer term gold loan.
Your credit score can be hit when your repayment is not on time.
What are the Options If You do not Have Gold to Avail a Gold Loan?
While a gold loan looks a great option on all fronts, what could you do when you do not have gold to pledge and yet have a need for a loan?
An online personal loan which is available even on low credit score could be a great alternative to a gold loan. Such a personal loan is easily available from Money View, one of the leading online personal loan lenders in India.
These personal loans have simple eligibility criteria like low minimum income criteria and a credit score requirement lower than that of a bank/NBFC. .
So, if you ever have a need for money and don’t have gold to pledge, apply for an easy personal loan from Money VIew. Download the app today!