Gold loans have gained popularity due to their accessibility, minimal eligibility criteria and competitive interest rates.
Gold has served as a safety net during times of financial distress. The concept of gold loans, known as loan against gold, has gained substantial prominence, offering a secure and accessible method for individuals to avail funds. Gold is not only a symbol of wealth but also a form of investment, gifting, and security. Gold is traditionally passed down through generations, and many families have substantial reserves of this precious metal.
One of the most important aspects of gold loans is their easy approval process. Traditional loans often involve extensive paperwork, credit checks, and a lengthy approval process. In contrast, gold loans are quick and hassle-free. The lender assesses the purity and weight of the gold, and based on the market value, disburses the loan amount. This expeditious process makes gold loans an attractive option for individuals seeking quick financial relief.
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No Credit Check
Gold loans are useful for those with lower credit scores. Unlike traditional loans, they don’t necessitate a credit check. Lenders are primarily concerned with the value and purity of the gold being pledged as collateral. This inclusivity opens doors for many people who might otherwise struggle to secure loans through conventional means.
Interest Rates
Gold loans are known for their competitive interest rates. These rates are lower than those of unsecured personal loans. Furthermore, borrowers have the flexibility to choose their repayment tenure, often ranging from a few months to several years. This means that you can tailor you loan repayment plan as per your financial health.
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Transparency and Safety
Lenders that provide gold loans adhere to strict regulatory guidelines. The gold is securely stored and insured, ensuring that it is returned in its original condition upon repayment of the loan. This transparency provides borrowers with confidence in the safety of their assets and the loan process.
Risk for Borrowers
If a borrower fails to repay the loan, the lender has the right to auction the gold. This ensures that lenders can recover their funds, making it a secure option for them as well. The risk to the borrower is limited to the value of the gold pledged, and there are no long-term consequences if the loan cannot be repaid.
In conclusion, gold loans have gained popularity due to their accessibility, minimal eligibility criteria and competitive interest rates. These loans not only cater to immediate financial needs but also bridge the gap for those who have struggled to secure credit through traditional means.
However, it is important to check the gold loan interest rates and read the loan agreement carefully before signing the loan agreement with the lender. The table compares the latest gold loan interest rates and EMIs for a gold loan of Rs 5 lakh for a 2-year tenure.
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Interest Rates & EMI on Gold Loan
Compiled by BankBazaar.com
Note: Interest rate on Gold Loan for all listed (BSE) Public and Pvt Banks and selected NBFCs considered for data compilation. Banks for which data is not available on their website are not considered. Data collected from respective bank’s website as on 24 Oct 2023. Banks are listed in ascending order on the basis of interest rate i.e. bank/NBFC offering lowest interest rate on gold loan (for various loan amount) is placed at top and highest at the bottom. Lowest rate offered by the banks/NBFC is considered in the table (Irrespective of loan amount). EMI is calculated on the basis of interest rate mentioned in the table for a Rs 5 Lac Loan with a tenure of 2 years (processing and other charges are assumed to be zero for EMI calculation); **with rebate.
