Busting myths about Gold Loan

What is a gold loan?

It is a secured loan that can be availed at any bank or financial institution in the country. Customers have to pledge their gold as collateral to get funds against it. Banks give borrower\'s the flexibility to use the funds freely. So there\'s no restriction on the end usage of the fund. This gives customers the flexibility to use it for various purposes.

Banks give customers the flexibility to choose a repayment tenure and structure according to the budget, income and capacity. So customers can calculate their expenses beforehand and then choose a repayment structure and tenure according to their requirement and repayment capacity. The funds are given according to the current Gold loan rate per gram.

Gold loan is one of the most widespread loan options in India. During this pandemic, a lot of people are getting encouraged to take gold loans to meet their current fund requirements. However, there are a lot of individuals who are still scared of applying for a gold loan credit facility facility because of the myths that have been around for years.

Let\'s bust some of the common myths:-

• Only neighbourhood jewellers provide the facility of gold loans.

A lot of individuals think that only the neighbourhood jeweller will provide them with the facility of a gold loan. But applying for a gold loan at those shops can be quite risky because they can replace your original stones with fake ones. So there are a number of banks and NBFCs that provide the facility of gold loans at an exciting interest rate. You can quickly get funds within one or two hours. You don\'t have to submit a bundle of paperwork. And getting a gold loan from a credible bank is always assuring and secure in every aspect.

• Your gold is not safe and will be secretly exchanged.

Banks that are regulated by the Reserve Bank of India are completely safe and assuring. A lot of individuals apply for a Muthoot finance gold loan payment at their neighbourhood gold jewellers, and that is quite risky because there is a chance that your gold will be secretly exchanged. But that\'s not the case with banks. Banks have lockers, cameras and a lot of security equipment that secures your gold ornament.

• Gold Loan has a high-interest rate.

A lot of individuals think that they can avoid the interest rates by applying for a gold loan facility at a neighbourhood jeweller. But neighbourhood jewellers store their gold ornament in the banks, so the charges include the interest rates that have been applied by the bank. So you can directly apply for a gold loan facility at a bank instead of paying more money to a jewellery shop. Banks offer various interest rates. The interest rate usually varies from 7 % to 13%. It is comparatively lower than your neighbourhood jeweller. And you can decrease your interest rate even more if you pledge another asset with that.

• The entire procedure of a gold loan is very time-consuming.

The application process of loans used to be very time consuming and long back in the day. But technology and banks have made so much progress that you can now get your loan application approved within one or two hours. You can apply for a gold loan facility using both online and offline modes, so you don\'t have to wait in long queues to get funds. And the entire documentation process of gold loans is very quick and easy. You\'ll have to submit the application form along with some essential KYC documents like Aadhar card, Pan card, Voter ID card, Ration card and Electricity Bill.

Conclusion:-

If you are in need of immediate fund assistance, then the gold loan is an ideal option. You can easily apply for this loan facility at any bank and get funds disbursed instantly.