A gold loan is a secured loan taken by an individual in case of an emergency or crisis. During the loan term, a lender keeps the gold as collateral. The borrower will be charged an interest rate by a bank or NBFC, and they will return the gold once the borrower has repaid the entire loan amount. Gold jewellery like earrings, bangles, necklaces, etc., is accepted by most banks and NBFCs for taking a loan. Here are some benefits of taking a gold loan.
1. Immediate Capital
In the case of a loan against gold, the capital is approved immediately and disbursed to the borrower's bank account after approval.
2. No External Collateral
Lenders provide the loan amount based on the total value of the gold jewellery, with no external collateral required for the loan.
3. No End-Use Restrictions
The borrower is completely free to use the loan amount without having to explain the nature of the expenditure.
4. Additional Liquidity
Gold loans provide easy liquidity based on an asset that otherwise lies dormant in bank deposit boxes.
5. Online Process
Applying for a gold loan is entirely online and does not require a visit to the lender's branch. The loan application process is simple and quick.
6. Tax Benefits
If the borrower is using the loan amount for home improvement, construction or purchase of residential, then they can get tax benefits.
7. Lower Interest Rates
These are secured loans with comparatively lower gold loan interest rates than unsecured loans. Low-interest rates ensure that financial obligations remain within the borrower’s financial capacity.
8. Gold Loan Transfer
Borrowers can even gold loan transfer from one financial institution to another. In many cases, lenders offer balance transfer facilities that allow outstanding a gold loan to be transferred at a lower interest rate.
9. Security Of Physical Gold
The lender keeps the gold in secured vaults and protects it against theft with an insurance policy. They return the gold to the borrower once the amount has been repaid in full.
Muthoot Finance, among other reputed NBFCs, offers gold loans with maximum benefits for customers. The biggest advantage of taking a gold loan from them is the security of the physical gold pledged by the borrower. So, if you are thinking of getting a gold loan, it can be a great option for you, given all of its benefits.