Financial emergencies can creep up anytime. To tide over such situations, it is crucial to have certain financial solutions handy that can help access cash on an emergency basis. Gold loans, for instance, make for one of the most viable financing sources to mitigate emergency funding needs.
Gold loans are funds that are borrowed from lenders pledging your gold as collateral. It is a convenient source of cash because of its flexible policies and lenient features. Although it is very similar to a personal loan in nature, it can be much more beneficial owing to several features. Most importantly, disbursal of loan amount happens quickly for gold loans, which can be especially useful when you are running low on cash during any emergency.
Now, financial needs can be quite unpredictable. You might require some urgent cash for your business or need a big-ticket amount for medical expenses. You might also plan to renovate your home and upgrade your standard of living. No matter what the situation, a close look at them will help conclude that all of these need liquid cash for settlement.
In such situations, you can unlock ample cash by applying for a gold loan from any of the financial institutions in the country.
Features of Gold loans
Following is a quick glimpse at the features of a gold loan. Individuals applying for this advance can not just avail high-value financing but also enjoy these features to maximize benefits:
- Processing time is very short, which helps in quick approval and disbursal of the loan amount.
- Financial institutions require minimal documents for loan approval. Even though it is a secured advance, there is no complicated paperwork involved in its processing.
- The eligibility criteria are also very lenient. Individuals from different backgrounds and professions would be encouraged to apply for a loan against gold.
- Being a secured loan, where you are mortgaging your jewellery, interest on repayment is less.
- Flexible repayment options and short-term tenor make gold loans even more feasible for the masses.
These features and benefits testify why a loan against gold is a viable option during emergencies.
There are several financial institutions like Bajaj Finserv in the market that offer gold loans. Nonetheless, to acquire the best gold loan, you must compare their policies and choose the one that best suits your pocket.
How is a gold loan different from an unsecured loan?
While it is crucial to gauge the benefits of gold loans before applying for them, it is also important to know why they are more beneficial than other unsecured loans.
As both of these instruments are somewhat similar in their features, what all factors make them different? The answer to this question can be given as follows:
- Secured loan
Gold loan comes under the secured loan category, where you deposit your gold jewellery as collateral to avail of the loan amount. But personal loans are unsecured loans, and there are no collaterals involved. Consequently, the eligibility criteria for unsecured loans are more stringent.
- Low rate of interest
Because of the collateral involved, the gold loan interest rate are low. Unsecured loans, on the other hand, attract a much higher rate of interest.
- Flexible repayment and short tenor
You have the option to choose your repayment regime for a gold loan. Short tenors, in this case, really help in curtailing the overall interest amount.
Certain NBFCs like Bajaj Finserv offer a considerable LTV under gold loans, which is decent enough to meet any big-ticket funding need. Make sure to compare the loan terms offered by each institution before applying for a gold loan.
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