Being a highly coveted metal in the country, gold stands to be of high value and worth. Not only does it have physical significance in everyone’s life, but there is also a strong emotional attachment to the yellow metal amongst the people. For centuries, gold has been used as a medium of exchange for valuable commodities and other precious metals. Gold, besides being used as a metal for making precious ornaments, is also used for a variety of purposes. In India, millennials started using this coveted metal extensively for loans and investments.
However, with so many options available in the market, you might face problems while choosing the best gold loan option. It becomes quite tricky when choosing the ideal gold loan financing company. In this article, you will learn about gold loans, their benefits, and some of the best financing options that you should opt for.
What is a gold loan? What are its objectives and significance?
A gold loan is financial assistance that you take from a lender by using physical gold as collateral. This makes the loan a secured form of loan, which provides additional benefits to you as a borrower. The lending institution charges you a specific interest rate for the loan amount it provides. This interest amount is charged on your principal amount, which you must repay through instalments within a set period. You can apply for a gold loan from multiple financial institutions, including banks, non-banking financial companies (NBFCs), private financiers, etc.
If you face a financial crunch and need immediate funds, a gold loan is your way out. In India, you can apply for a gold loan with both EMI and overdraft facilities, according to your requirements and convenience.
Now that you know what a gold loan is and its purpose, it is time to learn about some of its benefits before learning about the best gold loan financing companies.
What are some of the exclusive benefits of taking a gold loan?
There are several benefits to taking out a gold loan, and they are as follows:
- Low rate of interest:
Compared to unsecured loans, a gold loan provides you with a low interest rate on the loan amount. India’s gold loan interest rate starts at 7% per annum and goes up to a maximum of 29% per annum. The gold loan interest rate varies from lender to lender and depends on the credentials of the loan applicant.
- Easy eligibility:
Unlike other loans, gold loans can easily be applied for by anyone and do not require a high eligibility benchmark. You can easily meet the eligibility requirement without much documentation by using physical gold as collateral.
- No requirement of credit history:
This is a remarkable advantage of taking a gold loan over other loan forms. You are not required to show your credit history to get a gold loan, as you pose less risk to the lender.
From a security standpoint, your physical gold is kept in a secure environment to prevent theft. As a lender, I must provide safety for your possessions. Most banks use triple-layered safety features to protect your gold from exposure.
- Anytime Liquidity:
Gold is a metal, but gold loans are subject to Anytime Liquidity, or ATL. This means you can use your gold to claim a loan and get the loan amount disbursed within an hour without getting into rigorous paperwork.
Some of the best financial companies for gold loans
Many financial corporations and financiers provide gold loans to borrowers. However, this list shows some of the most preferable ones.
- SBI Gold Loans:
SBI Gold Loans are one of the best and most preferable financing options for applying for a loan against the hold. The gold loan interest rate is about 7.50% per annum, with 0.5% as the processing fee for the loan. The loan tenure ranges from 3 months to 36 months, depending on your credentials and the loan amount you take.
- Muthoot Finance:
Muthoot Finance is also a very decent gold loan financing option available in the market. The gold loan interest rate is about 11.99% per annum, with an additional 0.25% to 1% as your processing fee. The tenure for the loan against gold in Muthoot Finance ranges from one week to 36 months.
- Kotak Mahindra Gold Loan:
The gold loan interest rate provided by the Kotak Mahindra Bank ranges is about 10.50% per annum with 2% as your processing fee. You must repay the gold loan amount in the form of monthly instalments within 12 to 48 months.
- Union Bank:
Union Bank stands to be one of the best gold loan options available in the market. The interest rate for gold loans starts at 7% per annum and goes up to as high as 12.50% per annum, with 1% as the processing fee. You will be given a maximum of 12 months as the repayment period within which you are bound to repay the loan.
- ICICI Bank:
The gold loan interest rate provided by ICICI Bank is about 10% per annum, with a processing fee of about 1% of the loan amount. The tenure of repayment for the loan against gold ranges between 3 months and 12 months.
The Bottom Line:
Gold loans are one of the most prominent secured loan options available in the market. Not only is it a safe option where you don’t have to pay a higher interest rate, but it also gives you plenty of other features. The best part about getting a gold loan is that the lender does not dictate how you use the money. You can use it to buy a house, buy a car, make a down payment, or even use the loan amount to invest in your business. However, with so many benefits comes an issue that you will face while choosing the right financing company.
So, you should do ample research, contact bank officials, and use a gold loan calculator to find the best option. If you want to know more about gold loans and other types of loans like personal loans, housing loans, etc., you should visit Piramal Finance.