If you’ve read any blogs or articles, you would have a gist of gold loans. Gold loans are not that difficult to decipher. They are easy and quite in trend. Things become a trend only when more people know about it or are following it. Before we dive deep into what gold loans are and why do they matter. Let’s consider the basic system of loans.
What are loans?
When someone is in need of money, then they can borrow it from someone else. This practice is called a loan. Loans can be of different types. There are cars, home, gold, and personal loans. Amongst all of these gold loans are secured loans. In terms of secured loans, one needs to have collateral.
What is a gold loan?
Collateral is something that fetches you the money when you mortgage it. In terms of gold loans, gold itself acts as collateral. One gets money against the gold they keep. This is basically known as gold loans.
Why do gold loans matter?
Everything is a circle, finances, economy, life, everything is! Do you know that saying? What goes around, comes around. This saying is true in its every sense. Even in finances. Gold loans are important when the economy needs a cash-flow. We know that gold is brought through money, gold is also liquefied in money as well.
When you take a loan, you have money to spend, and the bank benefits from your gold. Now that you have money in your hand, you would spend it on more things. Hence, the person spends or buys it from someone, thus giving the money to them. That’s how there is cash-flow in the entire economy. In fact, gold loans need to be repaid and so the bank benefits from it as well. Once you pay them their installments, your gold loan interest rate are also helping the bank. Thus, the bank has a cash-flow from its customers as well. Banks aren’t earning any money, in fact, they have more expenses on their heads.
Thus, when you take a loan from any bank, for example, Karur Vysya Bank Gold Loan, they benefit from you. The CEO of the bank himself said that RBIs’ new decision of hike in gold percentage has increased by 90%. This has helped the bank get more money and customer footfall. This is why gold loans are important. They do have their part to play in the making of the economy. We know that you loved this blog and if you did then do not forget to tell us in the comments. We provide advice on various topics related to finance, banking, and loans. Our solutions are easy and quick too.
