Gold Loan: How to explore the maximum potential of gold loan

A loan can be a good idea in case of personal emergencies or to fulfil some long-held dream that was set aside due to potential expenses. A gold loan comes in handy in this respect. You can pledge your gold articles, which have a purity of 18 to 24-carat, as collateral in return for money. Gold loans offer quick disbursal and lower interest rate to borrowers. Sometimes an individual may fail to utilise the maximum potential of the option. Here is a guide for how to unlock the full potential of your gold loan.

Exploring the full potential of a gold loan

A gold loan has several advantages compared to other lending plans. It offers the borrower flexible repayment options and less to no foreclosure charges. Take a look at the advantages offered by a gold loan.

What are the advantages offered by a gold loan?

Flexible repayment options: Gold loans can have a flexible repayment tenure. One can even go in for a lump sum payment on maturity.

Easy to get: There is less hassle compared to home loans or other financial options since the documentation required is less. There is no requirement to show proof of income while availing a gold loan.

No external collateral: The gold articles serve as collateral, meaning no other property/item needs to be mortgaged. The borrower can get up to 80 per cent of the value of the gold.

Foreclosure charges: Many lenders do not offer foreclosure charges on gold loans. Some do charge 2 to 4 per cent of the outstanding principal amount.

No credit score needed: Unlike other loans, there is no credit score needed for a loan against gold. Individuals without a credit score can also opt for it.

Low interest rate: The interest rate is low compared to unsecured loans, meaning a lower burden on repayment on the borrower.

What can you use a gold loan for?

A gold loan can be used for a variety of purposes ranging from a trip abroad to funding one’s education. The lender does not keep a rigid check on the criteria for availing the loan. The money can be used even for funding one’s wedding expenses, getting working capital for new manufacturing equipment or to expand a business.

Home renovations done using a gold loan can come under Section 80C of the Income Tax Act, leading to deductions.

A gold loan is a good choice if one needs a quick and easy way to avail a loan. A person can utilise the gold ornaments in their possession to fulfil their dreams without having to sell the articles. With its numerous benefits, gold loans have emerged as one of the top financing choices today