Just like the yellow metal, a gold loan is also versatile and can solve many problems for you.
What is a Gold Loan?
A gold loan is a secured loan. A borrower approaches the lender with the gold they want to pledge or offer as collateral. The lender ascertains the gold’s value based on purity and weight.
Once the documentation is complete, the lender sanctions the loan based on the gold’s market value. The loan-to-value ratio varies as per lender policies. As per the Reserve Bank of India (RBI) guidelines, the maximum loan amount can be up to 90% of the gold value.
Shriram Finance offers its customers a seamless and hassle-free experience. It offers loans with the following features and benefits:
- Low-interest gold loan starting at 11.5%, with a flexible repayment schedule.
- Loan amount up to 75% of the gold value.
- Easy gold loans that require simple documentation with a quick turnaround time.
- Option for online gold loan application.
- Loan disbursal within minutes of approval.
- Loan available without income proof or credit history.
- Guaranteed safe custody of your gold along with insurance cover for the same.
Five Problems a Gold Loan Can Solve:
You can unleash the power of the gold in your bank lockers to solve the following problems:
With an RD, there is no specific amount that you need to invest. This feature makes a recurring deposit the most suitable investment option for all investors. The minimum amount for investment depends on the bank or NBFC of your choice and can go as low as Rs. 10.
1. A health crisis emergency
The pandemic has emphasised the significance of staying healthy. Medical expenses have been rising steeply each year, and so have the uncertainties. If you do not have medical insurance, a loan against gold can provide you with quick access to funds. Even if you have medical insurance, sometimes it might not be sufficient to cover all your expenses or cover some conditions. In such a scenario, a gold loan can come to your rescue.
2. Education funds
Education is the best investment for any person. Lenders offer education loans for funding higher education but, there might be instances when taking an education loan might not be possible. Lenders have strict guidelines about the courses and institutions for loan approval.
If the institute or the subject of your choice is not on the list for which the lender sanctions a loan, an education loan is not an option for you. If you want to pursue a short-term diploma course or take some professional training, getting an education loan might not be possible. Rather than give up your dream, you can take a loan against gold.
Sometimes an education loan might not be sufficient to pay for all expenditures. A gold loan can help bridge the gap between the loan amount sanctioned and the actual expenses. You can use these loans to pay for anyone’s education in your family - your children or even your spouse. The interest on gold loans is lower than education loans. You can use a gold loan calculator to compare the interest burden of an education loan with a gold loan.
3. Jumpstart a business
A loan against gold can help you set up your business or give it a boost. You may have a lucrative business idea and the necessary skills to turn it into a profitable venture. However, lenders might not see any merit in it. Borrowing against gold can help start your business.
First-time women entrepreneurs with no credit history might find it challenging to get a business loan. A low-interest gold loan can help them take the first step towards financial independence.
Gold loans can also help entrepreneurs who look for funds for a short time or need them instantly. When you pledge gold, you can access the funds almost instantaneously. You can fill out an online gold loan application to speed up the process.
4. Build your dream house.
A gold loan is not sufficient to buy a home. The tenure for a loan against gold is low, and you will need an enormous amount of gold to finance a home. When you buy a home, lenders sanction a percentage of the property value as a loan. You have to pay the remaining amount as a down payment. A gold loan can help you make this payment if you do not have enough savings.
Apart from the down payment, purchasing a house involves other expenses like registration fees or renovating it. You can use low-interest gold loans for remodelling your home, buying new furniture or for various other payments.
5. Pay for a vacation or wedding
Going for your dream vacation or buying a designer dress for a wedding is possible with an easy gold loan. Applying for a loan against gold is not complicated and can be done with ease. Whether you want to contribute to your wedding expenses or for a loved one, you can borrow cash against gold.
Gold loans can also help you when you are looking forward to your dream vacation or a quick getaway.
Things to remember before you take a loan against gold:
- Gold loans can help you with a temporary cash crunch as the loan tenure ranges from 12 to 36 months.
- Check the loan tenure and select one as per your requirements.
- Choose a lender who offers flexible repayment terms, online gold loan application and payment.
- Find out the processing charges, prepayment charges (if any) and late payment fee before finalising the lender.
- Use a gold loan calculator to estimate your monthly instalment to repay your EMIs.
As per a report, gold loans soared 77% on a year-over-year basis up to July 2021, which shows that the yellow metal can help you in times of distress. You can secure a gold loan depending on your requirements. However, you must research well and borrow what you can repay easily.