Exploring Gold Loan Schemes: How to Leverage Your Gold Assets for Financial Needs

Date of Published: September 13, 2023

Financial needs can arise anytime without any warning. During these emergencies, we often start worrying about the finances and rush for a solution only to find ourselves out of options at the end . We seek some debts or loans from relatives, and friends before approaching the banks and financial institutions. But sometimes banks refuse to lend money for various reasons like low income, bad CIBIL Score etc.. Now, the question is what should you do in this case? And the answer to it is- Gold.Every Indian family holds some piece of gold. The borrower can leverage the gold they have in their financial needs through various gold loan schemes. 

People generally purchase gold to create wealth as they consider it a safe haven and long-term investment asset. So, why not leverage it in our emergency or financial needs? 

Let us go through some benefits of gold loan schemes, and how you can take advantage of them.

What are Gold loan schemes?

Banks, non-banking financial companies, and other lending institutions offer financial instruments called gold loan schemes. These schemes allow people to borrow money by using gold coins, jewellery, or bars as collateral. The loan amount can vary depending on the lender’s policies because the loan amount is a percentage of the value of gold.

How does the gold loan scheme work?

Collateral

If a person wants to avail gold loan then he/she has to provide their gold in the form of collateral to the lender. The lender will check the purity of the gold and the weight of the gold to determine the correct value.

Loan Amount

The loan amount will be the percentage of the value of gold. The lender will offer the loan amount according to the collateral. The ratio of the money at which the lender lent the value of gold is called the Loan to Value (LTV) ratio and it can vary from lender to lender.

Interest rates and charges

When a lender gives a gold loan to the borrower, they charge interest on it. The gold loan interest rates can be fixed or floating. But they charge lower interest rates than personal loans. And there may be charges for processing and other activities involved.

Repayment 

Gold loans have shorter tenure than the other loan schemes. Lenders can choose the option of installment or lump sum for the repayment of the loan.

Loan closure/Retrieval of Gold

Once you will pay all the loan amount back to the lender they will return your gold to you back. If you fail to pay then they have a right to auction the gold to recover the outstanding amount.

Benefits of Gold loan schemes

No credit checks

Here gold is taken as collateral so there is no need for a credit check or any documentation related to income and credit history. It helps to give access to loans to those individuals who have low credit scores and bad credit history.

Lower interest rates

Gold loans offer lower interest rates as compared to the other types of loans. The simple reason behind this is collateral.

Quick Disbursement

We can take gold loans in very less time as it doesn’t require long documentation or any history check.

Flexibility

A gold loan gives flexibility in the repayment option. The lender can give the amount and interest back in two ways – Installments or Lump Sum.

Conclusion

Gold loan schemes are the best way to avail loans, especially for those who have a lower credit history and also who want to take advantage of lower interest rates. However, it’s very important to understand all the necessary terms and conditions and the problems attached with it. If you are someone who cannot understand the complications, then Value Gold is here to help. Value Gold actively seeks to help its clients to provide cash for gold by using its expert methodology to value the gold. It has the lowest processing fee in the market and has the most transparent processes as there is no human intervention at all.