Gold Loans Are Cheap and Easy to Get: Know More About It

The current economic downturn and rising gold prices hold an excellent growth potential for the Indian gold loan market. As per the reports from World Gold Council, it can rise to Rs. 4.05 lakh crore in FY2020. This report has also suggested that India’s organised gold loan market is likely to register a 15.7% growth to Rs. 4.61 lakh crore by FY2022.

The emergence of gold loans as an alternative financing option can be attributed to their easy availability, lenient eligibility and affordability.

Why are gold loans cheaper?

Gold loans are a secured financing solution that allows individuals to leverage the equity of their gold articles sitting ideal at home and avail funds against it. Being a secured loan type, gold loans are more affordable than many other unsecured credits that offer similar benefits.

For instance, if you are applying for a personal loan that extends similar features, you may end up paying an interest rate of about 9% to 16% in the current market. Whereas, if you decide to go ahead with a gold loan, you are likely to pay about 7.5% to 13% as interest. Therefore, it can suffice to say that you are likely to save substantially on interest repayment with this financial product.

The cheapest gold loans in India also remain so with their low processing fee and additional charges. Further, they rarely levy any foreclosure or part payment charges, preventing these from driving up the overall borrowing expenses.

These two factors play a significant role in keeping a gold loan inexpensive and accessible to many. Additionally, owing to its lack of extra charges, it becomes easier for borrowers to repay the credits availed without any hassle.

Alongside affordability, gold loans are also widely preferred by many for their easy availability. Prospective borrowers can now get their desired loan amount sanctioned within a few hours.

How to apply for a gold loan?

Applying for gold loans has become simpler and hassle-free with the introduction of the online application process. Here is a step by step guide into it –

Step 1: Visit a lender’s official website.

Step 2: Navigate to the gold loan application section and fill up the form with relevant details.

Step 3: Submit it for initial approval.

Step 4: After the approval, coordinate with company personnel to submit documents and complete the gold evaluation process.

Step 5: After successful document submission and verification along with gold article assessment, you will receive the required loan amount within a few hours.

A couple of points to be aware of here are the associated eligibility criteria and documentation of gold loans.

1. In terms of eligibility criteria, every Indian who is above the age of 21 years and possesses gold items can apply for this credit. Lenders do not focus on credit score or repayment history. Therefore, even if someone does not possess the perfect credit profile, he/she can easily source necessary funding through this debt instrument.
2. Moving ahead to the documentation, only KYC papers are sufficient to apply for this loan. One does need to submit any income proof or other details.

Besides affordability, easy application process and lenient eligibility and documentation, a gold loan offers other benefits as well.

Additional benefits of gold loans

Here are some notable advantages of gold loans that makes it a popular financing solution –

• Faster processing

As mentioned previously, gold loans do not mandate lengthy documentation, which reduces their total processing time. Even though it is a secured loan, there are no traditional mortgage papers and property documents involved in availing it.

Therefore, with gold loans, one can easily skip this hassle and avail their funds in a few hours. The availability of online application also contributes to this.

• Easy to repay

Cheapest gold loan interest rate in India may have made this financial product an affordable one, but repayment flexibility increases the convenience of a borrower. Here, individuals have the opportunity to pay the interest part of their loan first, in instalments or at once. They can settle the principal amount afterward. Otherwise, they can always opt for the classic EMI repayment.

Besides, the foreclosure and part payment options also favour debtors, as they can find an option to settle the debt faster and free up the collateralised assets.

• Part release facility

Gold loans are unique from any other secured debt instrument as they offer part release facility. This allows borrowers to release their gold articles as they pay off their debt. The particulars of this scheme, however, varies from one lender to another.

Furthermore, gold loans are affordable and come with a high LTV ratio that can go up to 90%, enabling applicants to avail of a higher loan amount. Also, the lack of any usage restrictions helps individuals to meet array requirements.

In case of a financial emergency, a gold loan can be an ideal financing solution with its affordable interest rate and easy availability.