Reasons why we should simply choose Gold Loan
The Credit system is an integral part of our financial lives. A lot of business enterprises function on a credit basis. It can also be said that credit helps a business survive in the economy. There are multiple credit facilities to choose from and various financial firms offering these credit services. So, which is the ideal form of credit and why? The answer to this question is gold loans. Gold loans are secured loans that charge a relatively lower interest rate and are easy to avail.
Different types of loans satisfy various needs of the borrowers, such as education loans, car loans, house loans, etc. Gold loan is the single most useful type of credit because it can be used for numerous purposes. And since it’s a secured loan, it is highly recommendable that people opt for a gold loan. India has an abundance of gold reserves. Indian households are one of the biggest consumers of gold throughout the world. But this gold is mostly just kept hidden at our houses. A gold loan helps an individual in making use of their valuable gold without selling it.
The following are the major reasons why gold loan should be prioritized over other loan
- Can be used for multiple purposes There are multiple types of loans that justify a specific purpose such as; home loans, car loans, agriculture loans, etc. These loans can only be received for a specific purpose but a gold loan can be used for any purpose. Whether it is personal use, business-related expenses, house purchase or repair, and any other reason you see fit. Gold loans even have a lesser rate of interest as we discussed earlier and are therefore a better option than most loans.
- Procedure Most credit procedures take a lot of time to get sanctioned. That is not the case with gold loans, as they get sanctioned swiftly. Gold loans can even be cleared within an hour. The only things you need are the necessary documents and your gold articles. After the verification process is complete, the lender will calculate the Gold Loan Per Gram value that shall be allowed to the receiver. Other loans require additional documents and even take days to get sanctioned. Gold loans have a simple and swift procedure.
- Rate-of-Interest Loans are provided at a certain rate of interest that has to be paid along with the principal amount at the time of repayment. Credit facilities such as personal loans are unsecured loans and therefore have a high rate of interest charged along with them. Gold loans on the other hand are secure loans that can be covered by the sale of collateral. This influences lower interest rates even for high values. For instance, the HDFC Gold Loan scheme offers an interest rate of 10.50% on a personal loan and 9.90% on a gold loan.
- Liability In the case of unsecured loans, failure to repay a loan might not result in an actual loss but it will still lead to the person being labeled as a defaulter by the lender. This means that the bank will regain its money one way or another. Gold loans are provided on a loan-to-value ratio and if an individual fails to repay their debt, the bank has the right to sell their gold articles kept as collateral. This is what it means when the term secured loans are used even if you fail to pay back your gold loan, you can opt for another afterward. But if you fail to repay a personal loan, then you might not get another loan anytime soon.
Conclusion: Gold loans are preferably a better choice as compared to other forms of loans. For the people who have gold to spare, gold loans are the ideal solution.