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HomeBusinessFinanceWhy Choose a Gold Loan? Top Benefits Explained

Why Choose a Gold Loan? Top Benefits Explained

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A gold loan is beneficial for people who are looking for urgent funds with a secured loan. The gold value determines the loan amount, which has no user-end restrictions, meaning it can be used for any purpose. The gold loan offers many benefits to its users, like low interest rates, minimal paperwork, and immediate capital, making it a cost-effective option.

Indian households purchase gold for any auspicious occasion, such as a festival or wedding. Despite its emotional value, gold can serve as a valuable asset when seeking financial assistance. You can leverage the gold as collateral to secure a loan from any NBFC or bank. Gold loans have become popular as many institutions are providing the service, and people can avail of these services with ease, which require minimum documentation and are relatively less hassle-free than other types of loans. If you are in need of financial assistance, here’s why you should opt for a gold loan:

High Loan Amount

One of the benefits of getting a gold loan is that gold is a highly valued asset around the world. The high value means it increases your borrowing capacity, as the loan offered is based on the value of the gold. Financial institutions take into account the current market value of gold; for instance, they will calculate the 1 gram gold rate today and provide a percentage (75%) as credit. If the value of gold is higher, you can borrow a large sum of money.

Instant Credit

Unlike other loans, such as home loans, which take longer to sanction due to extensive documentation and verification processes, a gold loan allows you to access funds instantly. For a gold loan, you need gold with the right purity. You can apply for the loan online. Once the gold is evaluated and its value is determined, the funds are quickly disbursed to your bank account. You can then use the amount to fulfil any specific needs, be they educational expenses, business expenses, or medical expenses.

Low Interest Rates

When you opt for a gold loan, it is considered a secured loan because you have kept your gold as collateral, which a lender can take over if you default. This implies that the lender grants the loan at low interest rates due to God’s security, thereby making it a low-risk credit. These low interest rates make the EMI lower than other loan EMIs, which can help save money and manage funds more effectively. Additionally, to clear up any doubts, you can use an EMI calculator, which allows you to calculate the cost of the loan and the monthly installment required.

No Credit Score

A gold loan does not require you to maintain a good credit score and income, like other secured loans. Even if you don’t have a favorable credit score or a low income, you can easily get a loan against your gold. Lenders only require gold purity, which should be 18 karats or higher. This makes the gold loan a more accessible option for people who may not be eligible for other loans. Additionally, the loan application process is less stringent.

With easy loan accessibility, simple eligibility criteria, and low interest rates, a gold loan is perfect for people who are looking for an immediate loan and want to meet any short-term financial obligations. Additionally, its multiple and flexible uses make it an attractive loan option. If you need immediate funds for any reason and have gold in your possession, consider applying for a gold loan.

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