As the name suggests this is the loan given against gold. Many nationalized banks, private banks and other financial companies offer this loan at attractive rates. Many go for this loan for short period to meet the requirement of their children’s education, marriage and other financial problems in the family. And others think that instead of keeping the gold idle at home or locker, loan against gold is the best option. Moreover with the rise in gold rates the demand from companies and banks offering such loans has raised. For instance, Muthoot Finance, one of the leading gold loan companies has seen 24 percent rises in gold loan against 17 percent raise in the market value of gold.
Advantages of Gold Loan
- Gold loan doesn’t demand any certificate to show your salary or income and even no credit card history is required. Thus even unemployed and non working people can go for gold loan.
- Unlike any other unsecured loan, gold loan doesn’t require many papers, only few documents such as ID proof and address proof is enough to avail for such loan.
- One of the main advantages of gold loan is its low interest rates. Usually loan over gold is provided at the interest of 12-16% per annum and this is quite low compared to personal loans available at interest rates of 15-26% per annum.
- In rural areas Agricultural loan against gold is also available for agriculturist at very nominal rate of Interest of 7%-8%, proof of agricultural document needs to be provided
- Gold loan is the most simple and convenient forms of loan because here all you need to do is pledge your gold with a bank or finance company and get upto 80% of the market value of the gold as a loan.
- Borrower will be given an option to pay only interest during the entire term and at the end of the tenure you can pay complete borrowed amount in single shot.
- In case of gold loan processing time is very less. Usually banks take just few hours to complete the process where as in case of NBFC’s (Non Banking Financial Companies) a few minutes is enough for the same. So for immediate financial help this is the best option.