Gold investment is not a new concept. It can be traced long back in human history. Traditionally, gold has always been considered to be an auspicious asset, especially when times of need arrive. People often opt for gold loan plans and generate cash for gold. There has been a boom lately in the numbers of gold finance companies rising to the centre stage of the world economic infrastructure.
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Why is Gold Loan the Future?
Those households that generate most of their revenue from informal segments and farming, the concept of loans against gold is indeed a lucrative opportunity. Homemakers often find it difficult to get approval when it comes to loans from big commercial banks because of the lack of a continuous income source. Freelancers and many sole-proprietors might fall under this section. As a result, several microfinance lenders, along with numerous big commercial banks, are trying to tap the immense potential of monetizing the amount of gold that is deposited by households through gold loans.
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Why Should You Go for Gold Loans?
Exactly why are gold loan plans a lucrative fit for borrowers, both the self-employed and people with an irregular income? Well, let’s find out below:
1. Build your credit score
Whenever you opt for a gold loan, a majority of lenders don’t take your credit score under consideration because the loan is secured against the gold coins or jewellery that you are about to deposit. If you are above 18 years and hold a government-issued identity proof and appropriate documents to prove the source of your gold, you are automatically eligible to apply for a gold loan. It’s as simple as that! In case you are a first-time borrower, the gold loan would also help you build a favourable credit score, given that you repay it on time. If you abide by the repayment rules and pay the money on time, it would subsequently set a base for your future loan requirements. As a result, in the near future, you may apply for any loans like a vehicle loan, home loan, or personal loan, with ease.
2. Works similar to Credit Cards
Just in case you are a self-employed person or run a small business, or someone working in an unorganized sector like farming, among many, or even a stay-at-home parent, it generally gets challenging to prove your consistency in terms of regular income. Commercial banks typically want proof of your consistent income before approving any loan in your name. In these situations, gold loans prove handy since these loans can be issued instantly with a minimal documentation process. Numerous microfinance lenders allow you to borrow against the metal, which in turn, helps you in bridging any cashflow mismatches in any month. In a way, gold can work like credit cards, since you can get hold of instant cash without hassles.
3. Ease of Access
We must appreciate the impact of large-scale penetration of smartphones and the internet across the world. Today, everything can be achieved online, and the same applies to gold loan applications as well. Any bank or an NBFC can instantly credit the loan amount to your account after you complete the online registration process and link your bank account with the lender’s portal. Such ease of access to loans has changed the small finance sector and gold loans are carrying the baton as a leader. The availability of online gold loans also means that you can repay the installment amounts as well as the Interest using the company’s online app. Moreover, you can also check your bank statement online. What else could the consumers have wanted for an easier loan approval framework?
4. Gold Price can be Your Advantage
Gold happens to be one of the rarest commodities that don’t fluctuate in price too much. And in the short term, in most instances, they rise before coming back to their original price. In that short period of the price hike, you can take immense advantage in the form of lower interests against the loans you apply for whether it is for gold or 2 wheeler loan. In simpler terms, gold comes with lower risks.
5. Get cheaper loans
If you are a part of a priority sector such as agriculture, you can get cheaper interest offers, which will make it easier for you to repay the amount.
So, the advantages of availing gold loans are certainly on the higher side. Now you have got five reasons to apply for one.