Gold loan (also called loan against gold) is a secured loan taken by the borrower from a lender by pledging their gold articles (within a range of 18-24 carats) as collateral. The loan amount provided is a certain percentage of the gold, typically upto 80%, based on the current market value and quality of gold.
1. Faster processing
The foremost benefit gold loan is that, processing happens in the fastest possible manner. Some leading banks process the gold loan even just 45* minutes.
2. Simpler repayment procedure
Yet another benefit of gold loan happens to be its simpler repayment procedure. It’s a unique feature where the borrower to choose to repay the interest amount beforehand and the principal amount at a later stage or during the closure of the loan. This unique feature makes gold loan pretty much attractive to many.
3. Lower interest rates
The next benefit of gold loan is the interest factor. Gold loan offers lowered interest rates as they happen to be secured loans.
4. Zero processing fees and documentation
Since gold loans are given instantly in lieu of physical gold, most banks and NBFCs choose to waive off processing fees.
5. Credit history is not an issue
If you want to avail a loan, usually banks or financial institutions check for a credit history. If your credit history is low, they often reject loans. However, in order to avail gold loans, no such thing is required. Since the person availing loan needs to deposit physical gold with the bank, the latter does not demand credit history.