In India, almost everyone owns some kind of jewellery and it is part of tradition to purchase gold ornaments in various festive occasions. It is among their most prized possessions. Apart from being a valuable asset, gold is also one of the most precious gifts that you can give your loved ones or leave it for your descendants. But the value of gold does not end here.
Did you know that you can use your gold jewellery to get a loan? A lot of people consider gold loan to be one of the best emergency fund solutions in India. As a matter of fact, over the last few decades, the gold loan sector in India has grown exponentially, and it promises to grow further in the future.
A gold loan is a secured debt. This means, you offer the gold jewellery as security to the lender against the amount you borrow. Since there is collateral involved, a gold loan offers several benefits to both lenders and borrowers.
- Quick Approval and Disbursement
Compared to other kinds of loans, the gold loan process in India is quick and efficient. Banks like South Indian Bank offer quick approval for the loan and same-day disbursement by depositing the funds directly into your bank account basis the amount you borrow.
To get the loan, you must bring the gold ornaments to any bank branches near you. The trained staff at the bank will assess the value of the gold based on its purity and weight and will suggest the maximum loan amount they can offer against the ornaments.
Once the loan amount is agreed upon, you must sign the necessary documents and take home the funds. This is a great advantage, especially when you are in dire need of funds.
Among the many advantages of gold loans in India, the lower interest rates are perhaps what will matter to you the most as a borrower. The gold loan interest rates in India vary from one lender to another, but they are generally lower than other unsecured loans.
This is because you procure the loan by offering your gold ornaments as a security cover, so the risk the lender bears is less. If you are looking to get a gold loan, you can consider applying for it with South Indian Bank, which has a reputation for offering gold loans at the most competitive interest rates.
- No Impact of Credit Score
In the case of a comparison between gold loan and personal loan in India, the credit score is one of the most significant points of difference. Generally, when you apply for a personal loan or any other type of loan, the lenders will determine your eligibility based on your credit score, as it reflects your creditworthiness. If your credit score is lower than the minimum score required by the lender, your loan application may get rejected, or you may get the loan, but with a levy of higher interest rate.
But, in the case of a gold loan, since you offer your gold ornaments as a security to the lender, they don’t look too much into your credit history or current credit score. This is because if you fail to repay the loan, the lender has the right to sell the gold you have pledged and recover the amount.
- Higher Loan-to-Value Ratio
If you are wondering why choose a gold loan over a personal loan or other forms of credit, well, with a gold loan, you get a higher loan-to-value ratio. Let us understand this better with an example.
Let us assume, you want to apply for a loan of Rs. 50 Lakh, and you pledge your house property. Typically, lenders in India offer a loan of up to 50% of the property’s value as a loan against property. So, even if the property's market value you pledge is Rs. 50 Lakh, you would get a loan of only Rs. 25 Lakh.
However, the best gold loan schemes in India offered by banks like South Indian Bank allow you to get a higher LTV of up to 85% of the gold’s value as assessed by the bank. This means you get access to a higher amount in comparison, and the disbursement is quick as well.
Gold loans are considered as one of the most secured loans in India for a good reason. With a gold loan, you not only get access to a higher amount at an affordable interest rate and quick access to funds, but you also get the guarantee of complete safety of your valuable asset.
When you pledge your gold ornaments to the lender as security, it is their responsibility to keep your precious ornaments safe and secure. Generally, when the lenders take your gold ornaments as collateral, they store it safely in a vault. This means you can breathe easy and be relaxed, knowing that your gold will not be stolen or misplaced.
The lender will immediately return your gold once you pay off the last EMI or repay the loan in full.
- Want to apply for a gold loan? Get the best offer from South Indian Bank
So, now you know the benefits of gold loan, and how it can be the ideal choice of credit to avail when you want the funds immediately or to meet an emergency need. And if you are looking for the gold loan lender, you can consider applying for the loan with South Indian Bank.
It is one of the most trusted names in the Indian banking industry. With South Indian Bank, you can get the gold loan at attractive interest rates, and most favourable terms and conditions than you can imagine. The Bank offers three types of Gold Loans – Gold Loan Personal Segment, Gold Agriculture Segment and Gold Business Segment. You can choose the right one to suit your specific needs.
The easy application process and quick disbursal, allows you to get access to the funds immediately without any hassles.
Disclaimer: The article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of The South Indian Bank Ltd. or its employees. The South Indian Bank Ltd and/or the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial/non-financial decisions based on the contents and information’s in the blog article. Please consult your financial advisor or the respective field expert before making any decisions.