Gold loans at less than 9% – Know pros and cons before borrowing!
Often we need funds urgently, but we have a few options to choose from. These options can have a huge impact on our finances if we don’t pay attention to the terms and conditions of the debt we are borrowing. If you are planning to avail a secured loan, one of the options you can opt for is a gold loan. A gold loan is a type of secured loan where individuals can borrow money from banks or a non-banking financial company by pledging their gold jewellery, coins, or other forms of gold as collateral.
In simple terms, you provide your gold possessions as security in exchange for a loan amount. This type of loan is commonly used to meet short-term financial needs. This type of loan has its own set of advantages and disadvantages. Here is what you must know before taking a gold loan.
* Easy Access to Funds
Gold loans are relatively easy to obtain compared to other types of loans, as they are secured by the collateral (gold) provided. The approval process is typically quicker, and credit scores may not play a significant role.
* Quick Disbursement
Once the gold’s value is assessed and the loan terms are agreed upon, the disbursement of funds is usually swift, making it suitable for emergency financial needs.
Also Read: Sweep-In FD Vs Liquid Fund: What’s your best option?
* No Credit History Required
Since the loan is backed by the collateral, lenders are often less concerned about the borrower’s credit history, making it accessible to individuals with lower credit scores. However, if your credit score is good, you can negotiate for competitive interest rates.
* Flexible Repayment Options
Gold loans offer various repayment options, including interest-only payments and bullet payments, allowing borrowers to choose a plan
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