Financial crunches strike the best of us. Whether it is a medical emergency or a lavish wedding, some extra cash is often needed. However, getting a loan from a bank may become painful or time-consuming. At a time when funds are urgently required, people often turn to other sources of financing, such as gold loans. A loan against gold is a convenient form of investment. If you have some gold with you, you can get a loan. Once you repay the loan, the gold is given back to you. Let us take a detailed look at how a gold loan works and how to apply for a gold loan.
The principal of a gold loan
So how exactly does a gold loan work? It is a straightforward concept to understand. It would help if you took your ornaments, and the lender will evaluate the gold. Only the gold component of the decoration will be valued. If there are any stones on the embellishment, the value of those will be ignored. A loan up to about 60% of the gold’s profit is given as a loan. You will have to leave the gold with the lender, who will lock it up in a safe vault. Your EMIs will then commence. Once you repay the entire amount, along with interest, your gold is returned , and the loan is closed.
Advantages of a loan against gold
There are some convenient advantages of opting for a gold loan. They are:
Readily available –A gold loan is possible very quickly. The only thing you need for this is genuine gold. If you can furbish the gold, you can get the loan instantly.
Unrelated to credit score –Usually, the credit score of a person plays an important role when availing any loan. But the case is different with gold investments. The credit score is not assess at the time of loan. Similarly, there is no affect on credit score if there are delays or defaults in the repayment.
Simple documentation – One only needs the simple KYC documents to get a gold loan.
These are some of the reasons that make a gold loan so popular among the people of India.
Applying for a gold loan
Here is how you can get a loan against gold:
Locate the lender – Most of the banks, as well as NBFCs, offer gold loans. Do some research and locate the lender who has the best interest rate.
Visit the branch – Visit the office with your jewelry and get it evaluate. Decide upon the loan amount and get it sanction. Submissions- Submit your KYC documents and deposit your gold. The loan amount will reach your bank account in a few hours.
Repay the loan diligently and get your jewelry back. Gold loans are beneficial, and if you have some gold lying with you, make it work in your favor. You can get some emergency funds and work your way out of a challenging situation with the help of the gold loan.