In case you are planning to take a loan, one of the better options that you can consider is gold loan, which is a much better proposition, when compared to loans like a personal loan. Here are 7 reasons why you should take a gold in place of loans like personal loan.
Advantages of gold loans over other loans
1. Interest rates
Interest rates are much higher in the case of other loans, particularly personal loan. For example, interest rates vary from 12.75 per cent to 19 per cent, while in the case of gold loans the interest rate is as low as 12 per cent per annum.
This makes gold loans a much better proposition, when compared to other loans. If the amount is rather large, the saving by way of lower interest rate can be enormous. It is therefore advisable to take a gold loan.
2. Loan disbursement with an hour
In the case of personal loans, it could take as long as 48 hours to 72 hours to be disbursed. As for gold loans, all you need to to do is gather your gold which you would like to pledge and your Aaadhar Card and chances are that you would come back with the loan amount with a maximum of 1 hour.
This is particularly true when you walk into gold loan companies like Muthoot Finance and Manapuram Finance.
So, it offers you the twin benefits of quick disbursal and also lower interest rate.
3. Processing fees
The processing fee in the case of gold loans is much lower and in some cases it is as low zero. Most banks charge about 2.5 per cent on processing fee towards personal loans. Even home loans and auto loans attract a decent processing fee charges.
4. No credit history needed
You also do not need a credit history. For example, when you take a personal loan, if your credit history is not good, the bank could decline the loan. For gold loans, the history does not come into the picture as gold is provided as a collateral.
This makes it far more advantageous.
5. No need of income proof
One of the other advantages of a gold loan is that it does not require income proof. An auto loan, home loan and personal loan all require the applicant to show some form of income or the other. It is almost impossible to get any other loan without an income statement, bank statement, salary proof etc.
6. You can pay interest only
In the case of gold loans, you can service only the interest every month. Let's say you took a gold loan interest at 12 per cent for an amount of Rs 1 lakh. What you can do is pay just Rs 1,000 every month and the lumpsum of Rs1 lakh, when you want to release the gold.
7. No charges for early closure
A gold loan does not attract any foreclosure charges. In the case of personal loans, these charges can go as high as 4 per cent, which is rather high.
Gold loans are fast and easy, but, you must make sure that you pay the loan back or the gold would have to be surrendered. A preferable place to take a gold loan would be a gold loan company rather than a bank, as disbursement could be quick.