Myths vs Facts about taking a gold loan

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Myths vs Facts about taking a gold loan
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Before the 1920s, the gold standard was widely
used as a monetary system, and the currency
values were linked to gold. The present-day fiat
money backed by the governments of respective
nations replaced the gold standard eventually.
Now that we have understood how gold has always
been a significant element attached to the
banking sector, lets delve deeper into what
a gold loan is and how does it work out.
Breaking down Gold Loan Facts Understanding the
basics of a gold loan will help you a great deal
if you are looking forward to taking one. The
gold loan can be understood as a type of secure
loan taken by the borrowing party from the
lending party. Here, gold articles are pledged as
collateral and act as a safety net for the
lender. Usually, the loan amount granted to the
borrower is less than 75 of the gold value. The
worth of gold articles is computed at the current
market standards.
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Gold loans are very similar to a personal loan in
the sense that it allows you to meet your
financial needs instantly. People generally opt
for a loan against gold to finance home
renovation or purchase, cover medical
liabilities, capital requirement for business,
etc. Most of these expenses are categorized under
the personal needs section. Gold loans have some
significant advantages that make it the perfect
solution for individual financial
needs. The gold loans are secured, which makes
it less risky for the lender therefore,
the documentation process is straightforward and
doesnt require extraordinary measures. It
provides you with the ultimate flexibility to use
the money as per your needs and requirements
without any speculations and intrusions. Also, in
the case of gold loans, you are not overwhelmed
by the lender to provide any additional
collateral. In addition to all these,
the interest rate on the gold loan is usually
lower as compared to personal loans. These were
some of the important details and facts about
gold loans. Now that we have a proper
understanding of what a gold loan is, lets
explore some of the popular myths about the same.
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Myths and Facts about Gold Loan There are a lot
of myths associated with taking a gold loan that
deters individuals from opting for this simple
financial tool. Some of the mainstream myths and
their relevant facts associated with gold loans
are mentioned below
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1. The first and foremost myth regarding gold
loans is that only jewellers and jewellery shops
offer it. This myth is deep-rooted, and people
who dont have much knowledge regarding gold
loans are left with only one option. The
alternative gold loan providers like banks and
Non-Banking Financial Corporations (NBFC) also
have gold loan plans for borrowers which are more
secure and systematic. The interest rate is also
on the lower side. 2. People are often scared
about their gold articles being stolen or
replaced with fake lookalikes. This is far from
the truth when you are taking a gold loan from a
reputed Fintech Company. The gold pledged to
these institutions is stored under vaults that
have robust security arrangements in place.
Reputed finance houses also guarantee the safety
of your gold article. You will be returned the
same gold article after you repay the loan amount.
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3. The third myth is that gold loans have the
lowest interest. The truth, in this case, is
subjective. Not all gold loans have a low
interest rate. The interest charged on gold loans
is determined by the borrowers profile, CIBIL
score (the CIBIL score is a three-digit number
that tells if a person is credit-worthy), and the
type of lender chosen by the borrower. The
interest rates are lower when you compare it with
personal loans, but it is highly subjective too.
Shriram City Union Finance has one of the most
affordable gold loan plans in the market which
you can easily avail at Simple Rate Of
Interest. 4. People usually have a perception in
mind that their gold articles cannot be used for
gold loans because the articles are ancient. This
is false, the government has issued guidelines
regarding the quality of the gold articles, but
it has not said that old ones cant be used to
avail a gold loan. The purity of gold article is
the only determinant, and as per the guidelines,
it must be of at least 18 Karats.
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5. The last myth we are going to talk about is
related to the gold loan process. People usually
think that the gold loan process is complicated
and time-consuming. It is not true at all, gold
loans have a swift processing time, and it often
gets approved and processed during the same day.
It requires basic KYC document verification to
complete the loan disbursal process it is the
fastest way of raising funds.
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