Many people invest in gold jewellery or buy gold biscuits because it is a safe investment. First of all gold is a precious metal and the prices keep growing. Additionally, when you need instant money you can take a gold loan in a few minutes. The processing may take 20-30 minutes but it is among the fastest ways of taking a loan. There are many gold loan companies that also offer good interest rates on gold loans. Due to this more people are investing in gold these days. You can also buy gold online in the form of gold bonds. If you read this article till the end, you will get to know most things you should know about taking a gold loan.
What is a Gold loan?
Before we dive deep into the topic, understand the basics of jewellery loan first. Loan against gold is another form of secured personal loan. Banks keep your gold as security and give you money. In case of a jewellery loan you can take up to 80 percent of the gold value in normal cases. It is the case with most gold finance companies. Additionally, you can also get instant approval in case of taking a gold loan.
Once you pay off the debt, you get your gold back. Starting from a loan against bricks of gold to jewellery, you can use anything for taking an instant gold loan.
Why people take out loan against Gold
Taking out a loan is a personal or a business decision. Due to this we cannot treat all requirements the same. Therefore, we have created a generic list of why people take loans. Additionally, we are considering a short term requirement where you need a limited amount.
Many people take out loans for home renovation. But if the requirement is not big, you can take a gold loan and pay back as soon as money flows in.
When you are running a business, there are many times when payments get stuck. This is the time when you need an emergency fund to come out of the mess. Gold helps you in managing the business. Profitability in business depends on survival. In tough times gold can become your savior.
Down Payment for Car
Car is a basic necessity but you may not have enough funds to purchase a car. A small gold loan can help you pay down payment. You can take a small loan against jewellery to make a down payment. For the rest of the amount you can take out a car loan.
This is one of the most common reasons for taking a loan against gold. When our loved ones are in hospital there is no time to get into paperwork and reference checks. Above all, banks take a lot of time in approving loans. Gold works as a great asset to get some instant money for paying hospital bills.
Education of Child
Most parents plan education but there are sudden requirements at the time of admission. Universities and colleges charge a huge amount in fees which sometimes become unaffordable.
If your situation does not fit here, you can see the list of all reasons to take out loans.
What will happen if I do not pay the Gold loan back on Time?
First of all, financial institutions do business by giving loans. Therefore, their intention is not to take your assets, unlike the old days system. They are only concerned about giving money on interest and taking it to the bank on time. This is also a great method to improve credit score. But it is possible that you fail to make payment. If you have genuine reasons for not paying the loan on time then you can talk. They might change your payment plan by offering loan restructuring.
If you miss multiple times and make a loan default. Then the bank will send gold for auction in order to recover money.
The Process of Taking Loan
The process of taking a long against gold is simple. Check these steps to understand it in detail.
- First of all you go to a gold finance company with the asset. From jewellery to gold biscuits, you can take out loans for almost anything.
- You need to assure them that you are a genuine person and the gold belongs to you. The gold loan company will take your identity proof.
- In the next step, they will do an evaluation of the real value of gold you just presented. They also check if the gold is genuine or not.
- Once the valuation process is complete they offer you a lump sum amount of up to 70-80 percent of the value. You can also take less amount depending on your requirement.
- After some paperwork, they will tell you about the gold loan interest rates on the gold loan and the total loan duration. Like all other EMIs, there is a due date.
- At last, the gold loan company will give you cash that you can use to fulfill the requirement.
The whole process takes about 20-30 minutes in real world condition. Still it is a better time for taking a home loan or a personal loan. Above all, if your gold is genuine, the company does not have any reason for loan rejection.