Before the festive season of Diwali, people try to renovate and paint their houses in order to make them look attractive. Families make a list of new things to buy, ranging from new clothes, electronic appliances and gifts for relatives and family members, but all this requires a lot of funds.
Such a high and urgent requirement of funds during Diwali season can only be fulfilled through a gold loan by mortgaging gold articles to a lending institution like banks or Non-Banking Financial Institutions [NBFCs].
Currently, there are various banks and NBFCs that offer gold loan to individuals at attractive interest rates. And with Diwali around the corner, the lending institutions may provide special offers in order to make their gold loans more attractive to borrowers.
Procedure to apply for a gold loan differs from one financial institution to another. But basically, you have to pledge your gold article to the lending institution, which will check its purity and evaluate its market value.
After the verification of the required documents submitted by the loan applicant, the Gold loan is sanctioned, which can be up to 80% of the gold value.
Below is a list of advantages of getting gold loans
No need for Income proof
If you apply for a personal loan, the bank will ask for your income proof to make sure that the person can repay the loan or not. But not in the case of gold loans, where the borrower has to deposit gold to the lending institution who will then give the borrower the loan amount. All this will happen without the need for salary or income proof of the individual.
No adverse effect of bad credit score
Bad credit score will not have any effect on your prospects of getting a gold loan. The lending institution sanctions gold loans once they acquire and verify the gold articles provided by the loan applicant.
Low-interest rates
Compared to the interest rates of unsecured loans like personal loans and home loans, the gold loan interest rate is comparatively much lower. Secured loans like gold loans are secured with gold articles which are mortgaged as collateral.
Speedy sanction
The gold loan does not require days or months to get sanctioned. The documentation requirements are minimum which leads to speedy sanction. Once the gold is handed over to the lending institution, the loan applicant will receive the loan amount in cheque or cash. The time taken on sanction depends on the verifications of documents and gold.
Easy to procure
It is easy to get a gold loan by just mortgaging your gold articles to the lending institution and getting loan amount upto 80% of the gold market value. As mentioned above, there are no additional paper works required which reduces the time taken in getting gold loan approvals.
Next time if you need some urgent funds, especially during festive seasons, do make good use of use gold jewellery by taking a gold loan.