A lot of people see gold ornaments only as jewelry for enhancing personal beauty. However, these can also serve as a backup plan in case emergency funds are needed. Gold jewelry indeed does have the power to save your life, business, property, and more.
By using these, it is easy sailing in the toughest of times. One of the easiest ways to get short-term loans is by pledging your jewelry to get a gold loan. Such loans are called gold loans, or loan against gold.
Perhaps you have already seen advertisements in movies of people giving over their jewelry to banks or lenders in return for immediate cash. Well, for once, all that happens in the real world too. You too can get a loan in a matter of hours or a single day when you go for a Gold Loan.
Traditionally, loans were provided against gold to borrowers by local money lenders or landowners. However, these did tend to have a very high interest rate. Today, banks and non-banking financial institutions offer gold loans, and the good news is that the interest rates are quite affordable. This is to ensure that everyone can access such loans in times of need.
There are, however, other loans that are similar to gold loans. The purpose of such loans is similar as well, that is to give customers the cash desired fast, without any hassles. These loans include personal loans and credit card loans. All gold loans, personal loans, and credit card loans have their own unique advantages and disadvantages.
However, gold loans fare better than the others because these are secured loans. The bank keeps your gold ornaments as a security. Besides, the money it gives you is maximum 80% of the value of your deposited jewelry. In case one defaults on the loan, the bank still profits.
The good news is that it is easier to pay off gold loans. This is because the collateral helps lenders to give you loans at lower interest rates, when compared to personal loan or credit card loan interest rates. Applications of gold loans are processed faster as well, and these need minimum documentation. Thus, banks and NBFCs have 4 ways to repay gold loans. You can even alter between them, in some banks.
Pay interest and EMI and pay principal later: When you choose this option, you finish paying the interest part of the loan first, and then once this is done, you tackle the principal amount. The principal is to be paid at the time of loan maturity. This arrangement works for most borrowers because they do not have to worry about paying principal while paying off the interest.
Partial payments: This means making partial payments of both the principal and the interest. You can choose to pay one and the other as and when you desire. Thus, amongst all the other payment options, this is the most flexible. In this option, it is not as important to conform to the EMI schedule. This is therefore a very customer-centric payment option for gold loan customers. You can have partial or complete payment of interest and principal. The payment schedule here is not important. If you repay the principal first, your interest rate decreases. That way, you can save a lot of money.
Bullet repayment: Under this payment plan, you are to pay the whole amount. That means paying the principal and the interest at the end of the loan term. That means you do not need to worry about paying interest and principal during the term, but only when the term is finished.
Regular EMI payments: This is the plan we know most. It is catered to the salaried customers. In this plan, you have to pay interest at the end of each month. The EMI is inclusive of both the principal and the interest.
In conclusion, you can prepay most gold loans from banks and NBFCs since most do not have a prepayment penalty, or a minimum lock-in period. Once the loan is repaid, the bank manager will contact you for returning you your gold jewelry. Need a gold loan yourself? Apply for a gold loan with us right away!