What are the advantages of taking a loan against gold?

 

The following are the gold loan benefits:

1. As the gold loans are guaranteed by actual gold, the lenders are often more than willing to provide the loan. As lending against gold is risk-free for banks because they can sell it if you fail, banks often release the loan within a few hours. This is due to the reduced processing time.

2. Option to pay just interest: Gold loans offer a unique feature whereby the borrower can pay only the interest portion, and the principle may be paid at the time of loan closure other Gold loans benefit.

3. Banks charge a lower interest rate than unsecured loans like personal loans because they are secured loans. 

4. No processing costs: - Most NBFCs and banks do not charge processing fees since these loans are granted instantaneously in exchange for the gold jewellery kept by the lender as collateral.

5. Low or no foreclosure fees: - other lenders do not charge any prepayment fees. However, other banks impose a 1% prepayment penalty.

6. No income verification required: – Typically, lenders do not seek income verification since the loan is backed by the gold to be kept at the bank.

7. Bad credit history is not a factor: As gold is used as collateral, the lenders are not concerned about the borrower's credit history because they are not concerned about the primary component.