Gold is the most tangible asset and also the most preferred when it comes to investing because of its rarity, as well as its universal appeal. A gold loan can help you bypass the obstacles that may complicate your path to owning this commodity and buying precious metal straight from the source. A gold loan can be seen as an alternative form of financing that allows borrowers access to precious metal without having to part with any cash.
Gold loans are a form of personal finance that is based on gold as collateral instead of a
lump sum of cash. It is also referred to as loan against gold and is a secured loan that
allows a person to borrow or loan a certain sum of money in lieu of gold kept as an
indemnity.
Furthermore, the terms of the loans are flexible and can vary depending on certain factors
such as the security that is offered in lieu of the gold.
The concept of a gold loan is relatively simple and consists of obtaining the loan from a
third party and placing your gold in the lender's storage facility. This form of borrowing
is beneficial to most lenders as it reduces their risk, without compromising on the
security, integrity or liquidity of their precious metal.
The process of obtaining a gold loan is an easy one that can be completed in as few as 10
minutes. If you're approved, the funds will typically arrive within 24 hours and if your
application is denied, the bank will always contact you to let you know why and work with
you to try and get your question answered.
The process of applying for a gold loan can be summarised in following points :
● Fill out the form and establish the authenticity of the jewellery/gold that is going to be
put on lease for an extended period of time.
● Submit all the required documents and complete all the formalities that are mandatory to
have your gold loan approved.
● Once everything is reviewed and verified, you'll receive a decision on whether or not your
application has been approved.
● Enjoy the funds as long as you comply with all terms and conditions. If there is a breach
of contract, the gold will be sold and the proceeds used to pay your debts and if your
application is denied, the bank will always contact you to let you know why and work with
you to try and get your question answered.
● Emi option : The gold loans holder can make a monthly instalment to the lender and buy
themself time until they repay the loan in full.
● Gold pawn : Gold is handed over as collateral for a loan. When the loan is repaid, he can
get his gold back.
● Commercial gold : Gold lent for commercial purposes. The loan will be repaid in the form
of gold bars which may be exchanged for cash or other investments.
● Gold Exchange (exchange) : The parties agree on a fixed amount of gold, which they wish to
exchange against another asset at a later date.
● Gold leasing : When lenders lease out their gold to one borrower.
● overdraft facility on gold loan : A loan where a gold buyer’s account is overdrawn till
repayment of the loan.
● Gold credit : An agreement to pay interest on the gold’s current market value and a
certain day when payments will be made.
Gold loans can provide you with a number of benefits that aren't as easily achievable with
traditional personal finance options.
The main benefits of gold loan can be summed up under 3 domains:
1. Flexibility: when dealing with regular personal loans there are a number of rules and
regulations that you have to follow. It can be time-consuming and expensive to deal with
banks, and the requirements they have can make it difficult for those who don't have enough
money in their checking accounts. Gold loans offer a more flexible approach because you
don't need to transfer your jewellery whenever you want money.
2. Diversification : It is a successful program that can help you make some extra income
with comfortable paying options. Gold loans also help in asset management, risk mitigation,
and tax-avoidance.
3. Convenience: When you want to buy a product or want to fulfil your dream, you may be
required to pay cash, or you may have already spent it already but in between and you are in
need of money. Gold loan is the solution and the best option for the people who face these
types of problems. It is provided by many companies and available at reasonable rates.
4. Ease and affordability: Gold loan can be availed against the gold ornaments like chains,
earrings, necklaces etc. The gold loan can also be availed against modern day gold ornaments
like mobile phones. Gold is a good substitute for cash.
You can use it to make purchases, paying off high interest credit card debt and for flexible
loans for any purpose you wish. The requirements for gold loans are simple, enabling anyone
to get it without even presenting the documents that are required for other types of loans.
5. Interest is calculated on a daily basis: The interest rates are always fixed making the
loan affordable to most people. The interest rate in gold loans are always below the bank
rate of interest
These benefits make gold loans an attractive alternative for those looking to manage their
finances more effectively. Gold thrives in a variety of economic conditions and
is a suitable investment for almost anyone.Gold loan schemes are offered by various
financial institutions throughout the world and help individuals save on interest as well as
pay off their debts faster than they would if they were to obtain a straight deposit loan.
