Gold Loan

Gold Loan

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.

What is a gold loan?

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.

How to apply for a gold loan? :

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.

Types of gold loan :

● 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.

Benefits of gold loan :

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.