Gold is a crucial asset that has enticed humans for several years and still does. Even the Indian Central bank has a huge reserve of gold against all their currency. This endows you with a prudent idea about the significance of gold being an investment. Gold is nothing but an appreciating asset because its value enhances with time. Most hold gold in a specific quantity as coins or jewelry. Many do not sell the gold until the offer is extremely compelling. How do you use idle gold that is lying at your home during any financial emergency? Assuming you do not hold any other spare liquid asset, you can consider gold as a prudent route to raise funds? Here, the discussion is not about selling precious jewelry. You can apply for a gold loan through HDFC bank gold loan, Bank of India, Bank of Baroda, or any other lender.

What are the advantages of a gold loan?

There are various reasons you must consider when the requirement for funds comes up. Any citizen or resident falling between the age group of 18 and 70 years qualifies to apply for the gold loan. Here are some benefits mentioned –

∙       Can put idle assets to great use

∙       Reduce your rate of interest

∙       Get an instant loan in just a few minutes

∙       Minimal documentation

∙       Flexible repayment schedules

∙       Collateral security

∙       Encrypted systems offering data privacy

∙       Zero impact of having a low credit profile

∙       Good customer experience

Can put idle assets to great use

A gold loan benefits you to put idle gold to great use in case of any financial exigency. The gold loan procedure is very simple. In place of borrowing from friends or family, you can simply mortgage your gold to avail the proceeds for your children’s higher education, business, medical exigencies, etc. Once you repay the loan with the interest, you can get the gold back.

Lower rate of interest

As secured loans, gold loans come with a lower rate of interest. The gold loan rates are very reasonable. Hence, it becomes even more appealing for you to go for this loan. Usually, the rate of interest of a gold loan is around 8-12 per cent per annum and an unsecured personal loan has an interest rate ranging anywhere between 12-24 per cent per annum.

In case you have a gold at-home loan, which you are not using, then you can use the same in this way. Likewise, you can resist your very urge to swipe your card for buying big-ticket goods. Credit card issuers levy 2.5 – 3 per cent every month when the gold loans are available at a rate of as low as 0.67 per cent per month.

However, lending partner selection is very crucial for you as a customer as you must not fall into the massive trap of jumping rates. Such loans come at extremely low rates; however, with jumping rates, you may end up paying even more of something ranging between 15-24 per cent per annum, i.e., the same as any unsecured personal loan option. For instance, if you consider availing the loan from an HDFC gold loan, then you may get the lowest rate as HDFC bank gold loan interest rate offered to customers between the period of July 2022 and September 2022 was 7.60 per cent per annum.

Quick loan in just minutes

Gold loans are processed quickly. Once you fill out the details on the lender’s site, a representative will visit your house. Once the representative visits you, complete the gold valuation as well as documentation. Once all your documents and your gold are verified, your gold will get placed in a sealed bag and the disbursement process will begin. Next, gold will get deposited in the branch nearest to your location.

Minimal documentation

Unlike other credit options, the processing of a gold loan is very simple. It does not include complex documentation. As gold is provided as security or collateral, documentation regarding the gold valuation must be done. Additionally, the listed documents must be kept handy.

∙       Passport size photos

∙       Identification proof – Aadhaar card, PAN card, passport, ration card, driver’s license.

∙       Address proof – Voter ID, Aadhaar card, driving license, lease agreement, utility bills.

No requirement for further documents.

Flexible repayment plans

You can get the best gold loan from different lenders like Bank of India, Bank of Baroda, Union Bank of India, HDFC bank gold loan etc. They provide a slew of repayment plans. Based on your convenience and affordability, you can make interest constituent payments on a month-on-month basis and make the repayment of the principal constituent at closing time. Alternatively, you can even repay both your principal and interest component in a single installment towards the end of the loan repayment tenure. The third option, you can route for is an overdraft gold loan wherein the interest constituent will be levied on a month-on-month basis based on your usage.

Safety for your security and collateral

When you place an application for a gold loan, you must select a trusted lender. As you will be giving them your gold as security or collateral, you would require confirming the safety precautions taken to protect such assets. Top lenders usually make sure to take various steps, to ensure your gold is secure. Your gold is valued as well as sealed in front of you in a bag. This is stored in the storeroom of your nearest branch. Whenever you close your gold loan, your gold is given back to you.

An encrypted system that offers data privacy

All the digital podiums require you to maintain the data privacy of your customers. Gold lenders make sure to adhere to such rules and regulations, too. Thus, most lenders have a secure and encrypted system to best protect your data which they collect through digital or paper mode. The info about gold collected from you is even stored securely.  

Zero impact of having low credit profile and score

Unlike personal loans, wherein credit score plays a crucial role, your score is not an important parameter in the case of a gold loan. As a gold loan is secured in nature, the requirement to have a good score does not increase. The loan gets backed by the security, i.e., gold provided by you. In the case of any default, gold can be sold off to repay your loan.

Good customer experience

Getting a gold loan is a simple way in this digital age. You can directly call the preferred lender or ask for a callback. Once you place an application for a gold loan, in the case of an online application, the executive will approach your home, value your gold, finish all the important documentation work, and disburse the loan post keeping the gold in a safe place. Once you repay your gold loan, you can get your gold security back. So, to avail a gold loan, you do not require moving from your seat, literally!