As per www.gold.org, Indians own more than 22,000 tonnes of gold and gold jewellery represents over 50% of gold demand in India. Its lustrous sheen and auspicious connotations make gold the most desirable yellow metal in this part of the world. For a lot of gold owners, gold also offers its owners the advantage of immediate liquidity by mortgaging the gold or jewellery without having the sell the jewellery in a financial emergency – in the form of a Personal Loan against Gold.
In this loan, all you need to do is deposit your household gold in the form of jewellery with the bank or financing agency and get a loan of up to 80 per cent of the value of the gold deposited. The process requires proper documentation such as submission of identity proof, PAN card, address proof, etc. However, as you enjoy gold as a means to take a loan, RuLoans wants to share five precious truths that you should not ignore when it comes to taking a Personal Loan against Gold:
Golden Truth # 1
Personal Loan against Gold can be quick to get : Personal Loans against Gold are the perfect bet when it comes to meeting any urgent financial requirements. The overall loan processing time is quite less and you can get a Personal Loan against Gold approved swiftly, making it an almost instant loan. That is a huge advantage in comparison to the approval time taken on any other loan needed for emergency purpose.
Golden Truth # 2
There are many flexible schemes available on Personal Loan against Gold : Unlike other loans, Personal Loans against Gold offer various flexible schemes. Some lenders even allow to pay interest component during your loan tenure and the borrowed amount at the end of the tenure, making the loan really useful at a time when you are hard-pressed for money anyway.
Golden Truth # 3
Personal Loans against Gold is short in tenure : RBI has put a cap of 75% as the Loan-To-Value (LTV) ratio for all NBFCs offering such loans. Let’s understand this with a simple example: Mrs. Suhani Singh needed an urgent loan of INR 75,000 for a personal purpose. So she had to mortgage gold jewellery worth Rs. 1 Lakh. Plus Personal Loans against Gold typically have a maximum tenure of 1 year. It is advisable to take gold loan only if you can repay the amount in that short period.
Golden Truth # 4
Interest rate is much lower as you are providing a security : Since you are offering your household gold as security, the interest rate is much lower in case of Personal Loans against Gold when compared to pure Personal Loans. The processing time for personal loans against gold is also lesser as compared to other loans.
Golden Truth # 5
Personal Loans against Gold means lesser repayment worries : In case, you are not able to repay your gold loan, the bank will take possession of the pledged gold or jewellery to recover its dues. Beyond this, there is no unwanted recovery problem, which is always the risk in the case of an unsecured loan like personal loan or even loan against property (recovered through the sale of the property).
Personal Loan against Gold is a golden opportunity, but it is important to be aware of all facets to #BorrowRight make the most of this loan.