Our obsession for gold is ageless. Their time immemorial craze for gold is still shining bright. Indians will splurge half of their savings on the yellow metal, as they consider it precious. They reckon gold as a commodity of immense value which can reflect the status of wealth. At an investment level, gold is always considered a haven.
With economic activities slowing down due to COVID-19 lockdown, more people are likely to pledge their collection of precious metal to get a loan. Gold can be a friend in need during a financial crisis. Gold loans have always been word of mouth during such emergencies as it is easier to avail. As the majority of Indians own gold, they can easily approach lenders for getting a loan.
Here are some reasons why Indians prefer loan against gold to overcome a financial crisis.
Gold prices are rising – When you pledge gold as collateral, you’ll get the loan amount depending on the current market value of gold. A rise in the price of gold often makes you eligible for higher loan amounts.
The easiest way to get funds – Compared to other types of loan, loan against gold is easy to avail. Banks consider gold as a secured asset, hence there is no need of any collateral. Gold loans are known for their quick disbursal. If all the required documents are intact, you can even get the loans within a few hours.
No restrictions on usage – Most of the banks have set guidelines for the usage of loans. The gold loan doesn’t have any restriction on the utilization of funds, which makes it popular among the people. It can be used for any purpose.
Higher loan value – As gold is considered a highly valued commodity, you will get a higher loan value based on the quantity and quality of gold. Most of the lenders give you up to 75% of the pledged gold’s value as the loan amount, with lower gold loan interest rates.
Flexible Repayment options – Gold loans repayments are flexible than other types of loans. Based on your convenience, you can repay the loan as fast as possible, or you can stick with the tenure. You may also get the options to pay the interest on a monthly, quarterly, half-yearly or yearly basis.
Gold security – Keeping gold at home is unsafe. When you avail a gold loan, the banks will keep your gold protected in the lockers. They won’t levy additional charges for this. Hence, gold loan is an excellent option to get money and keep your gold safe.
Often, loan against the gold is considered a reliable alternative during emergencies. The flexible features that gold loans offer have made it a preferable choice among the Indian people.