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The Advantages Of A Gold Loan Over A Personal Loan

 

Loan against Gold

 

Augmont Indian households find themselves invariably attached to the precious metal they possess emotionally. The deep sense of belonging to oneself that Indians attach to the precious metal leads them to collect jewelry, coins or bars that are made from it. Even in the most basic areas of the country, it is frowned upon to plead family-owned gold assets to pawnbrokers or formal money lending institutions. Indian families do not usually sell their gold assets even in the event of dire financial emergencies. The monetary value of gold assets in India is not often realized.

The Gold Loan is better than a personal loan

Many experts praise the advantages of the benefits of a Gold Loan online over personal loans. Gold loans and personal loans are both obtainable to those who wish to meet any kind of individual need like marriage expenses or purchases etc.

These are the main differences between gold and personal loans.

Collaterals

Borrowers are not required to present any collateral in personal loans. However, a gold-backed loan is sanctioned, keeping the gold assets as collateral.

Cost of raising the funds for

Banks are not allowed to lend collateral in the case of personal loans. The lending institutions then look over the documents proving income of the applicants for loans. They then charge minimal processing charges for personal loans. The processing charges for personal loans usually range from 0.5% to 1.5% of the loan amount. If you are applying for a gold loan loan, the borrower does not have to provide income proofs since they offer their gold assets as collaterals. This means that they do not have to pay processing charges.

Timeline

Most financial institutions scrutinize the income of the proof documents without collateral when they receive applications for a personal loan. They also conduct thorough due diligence to determine if the applicant has adequate repaying capacity. This can be a time-consuming procedure and could delay approval of the loan. For loans involving gold the procedure is simple. The borrower must submit his gold assets as collateral, and then sign several documents. The amount of the loan is approved in a short time.

 

Amount of Loan

Lending institutions can offer personal loans up to Rs.40 million to borrowers. However, applicants who want gold-based loans can enjoy an even higher limit on loan amounts. The maximum amount banks and NBFCs will allow for loans in gold is INR 5 million. Therefore, those who want to obtain larger sums of money must choose the gold loan option.

Low-Interest Rates

A broad comparison between personal loans and gold loans shows that gold loans come with lower interest obligations. A personal loan that is sanctioned at 16-22% interest rates is for a gold loan, while a loan is sanctioned at interest rates between 11-13 13%. For a borrower, this means that the expense of getting an investment in gold is less than the cost of getting personal loans. Paying back gold loans is a lot simpler than repaying a personal loans, even though they cost the same amount.

Flexible Repayments

For loan against gold, borrowers can choose from various repayment options. To pay back a gold loan, borrowers could choose to use the usual EMI option. Borrowers can choose to pay back the loan amount and repay the interest during the loan term. Sometimes, borrowers choose to pay for the interest and loan amount at end of the tenure in a lump sum.

Conclusion

For most Indian households, gold is the most preferred avenue of investment. Investors have numerous choices for purchasing the shiny metal, due to the constant rise and fall of prices for gold. For the long term gold is an excellent investment because it gives you the possibility of borrowing money. It is fair to conclude that borrowing against gold assets is a more profitable option than availing personal loans.

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