What is Gold Loan and how does it work?
Most Indians possess such a great passion for gold that we acquire between 25% and 33% of the world's gold production every year! The intrinsic worth of gold is loved and appreciated the world over, whether in the form of bridal jewelry or bars and coins for investment.
Completing a gold loan process is a great way to acquire a desired monetary amount without having to pay large sums as interest.
Banks and lenders nowadays recognise and value gold in just about any jewelry form, as long as it is of specific purity and weight. Gold is valued due to its scarcity and the time and effort required for extraction and processing. Gold can also work as an excellent option to give you money urgently whenever you need it. It can be converted to cash instantly, and most banks/gold lenders will keep your gold safe till you return the money.
How do gold loans work?
Whatever shape gold takes, its fundamental worth is linked to global dynamics of demand and supply, giving it substantial value. If a person has gold and is in desperate need of money, all they need to do is present that gold to a bank or a financial institution and obtain a gold loan.
The interest is also low, the repayment terms are flexible, and obtaining a loan is often easier when gold is used as collateral. Banks feel confident knowing that the loan is secured, and the applicant may leverage his / her gold for the advantage of near-instant approvals and favourable interest rates.
These are some of the benefits of taking gold loans and they’re a secure way of ensuring you’re safe, when it comes to fulfilling short term cash requirements. You won’t have to deal with the exorbitant rates, and finally they are also a smart way of ensuring you don’t fall into financial trouble.
When and how should you take a loan for your gold?
To begin with, keep a close tab on gold price changes. Buying cheap and selling high is the oldest, most fundamental, and most dependable technique to profit from commodities.
It’s important that you also manage your finances in such a way that you only take a loan for gold when you truly need it. The price of gold rarely drops so taking out a loan for it is an excellent idea for instant cash. Also, it’s likely the price will increase with time, so it’s always a good idea if you’re planning on taking a loan by using gold as a collateral.
The appreciation of gold:
Remember that the greater the gold rate at the moment you wish to take a loan, the larger the loan amount, since your gold will be valued more than what you paid for it. It is worth what it is worth on any particular day, and any transactions involving your gold will be conducted at that rate, irrespective of the rate at which you acquired it.
So, if you want a loan, unlock your gold locker and bring your gold to the bank/financial institution or online lender. The advantages of getting such a loan might serve better when it comes to repaying it, as it is easier to repay a loan with a reduced rate of interest and the duration option of your choice.
With the amazing jewellery loan interest rates at Muthoot FinCorp ONE, you’re assured of working with one of the best in the country. We’ll also help you in the entire process, by storing and insuring your gold so that you can use the money and retrieve your gold whenever you need it.