In India, gold has always been a popular asset class. Despite the emergence of a variety of investment options, gold is still going strong. Gold has the following benefits as an asset class:
It helps you hedge against financial risks
Diversifying with gold enables an investor to deal with inflation
Another advantage that gold offers is that it can be used as collateral for a loan. Loan against gold is a burgeoning market. It is estimated that India’s gold loan market would touch Rs 4,617 billion by 2022. There are several financial institutions providing loan against gold in India.
A gold loan is offered by a lender to a borrower in exchange for gold being kept as collateral. It enables a borrower to access funds quickly without experiencing complicated paperwork. Here is all you need to know about cash for gold or gold loan.
How does Gold Loan work?
When a customer decides to take a loan against gold, the first thing to consider is choosing a good lender. Authentic and trustable lenders who evaluate gold at higher market value are the best considering the safety of gold.
Today, there are several lenders with offline branches and online facilities where gold loan applications can be submitted. The application will be processed and then the customer is asked to bring the gold for testing and valuation.
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Depending on the overall weight and purity of the gold, the loan amount will be estimated. A lender disburses the loan amount and keeps gold in their security locker until the repayment of the loan.
What Kind of Gold can be Pledged?
Any type of Gold such as jewellery, coins, bars, ornaments can be used to get cash for gold. There is no restriction on gold valuables to be pledged as long as they are genuine.
Since the valuation entirely depends on the purity, jewellery and ornaments may not give 100% value because of the stones and other styling accessories.
Types of Gold Loan
One of the biggest benefits of a gold loan is that it can be used for anything.
Types of gold loan are nothing, but the several schemes offered by a lender. In order to attract customers, lenders have introduced many different schemes which vary depending on the requirements of the borrower.
There are special schemes for marriage, child education, schemes that offer higher loan amounts, EMI based loans, schemes to disburse the loan amount in intervals and many more.
You can check the lender’s website or contact them directly to know about the schemes and various options including gold loan emi calculator to calculate interest rate and to avail loan against gold.
Benefits of Taking a Gold Loan
Gold Loan is a type of collateral/secured loan hence the entire loan procedure is quicker as compared to other types of loans.
Very few documents are required to process the gold loan application.
It offers great flexibility to repay the loan in EMIs. Few lenders offer a variety of gold loan schemes making it easy for everyone.
Online gold loan facility helps to get a quick loan and manage loan-related transactions online. Checking balance loan amount, part payment of the loan, topping up the loan, etc. can be carried with the help of an online account.
There is no restriction such as employment or stable income to get cash for gold. This makes gold loans convenient and accessible to everyone.
You can keep all these points in mind whenever you are planning to apply for a gold loan. It may also be prudent to print this out and use it as a checklist. However, it is of paramount importance to choose a credible lender. It would be a good idea to seek recommendations from those in your network who have availed of a gold loan earlier. Alternatively, you can also check out recommendations or testimonials given online.