Gold loan is an advantageous way of fulfilling your short-term and urgent money needs. You can get gold loan within an hour and just with your identity and address proofs. You can repay the gold loan as per your convenience. But what about your favorite gold necklace? Let us check out with the advantages and disadvantages of taking gold loan in detail.
You are in urgent need of money. You can either take a personal loan or take a loan against your gold ornaments. Well, you will be confused between convenience and emotions.
Pros of taking gold loan – nothing as dazzling like gold loan benefits
If you need a gold loan, approach a reputed bank or financial institution with your gold ornaments. We are assuming that your gold ornaments are pure and as per the standards. Submit proofs of identity as well as residence to the bank. They will check with your gold and documentation. According to their calculations, they will assign you will gold loan amount instantly. This should not take more than an hour provided not many people are standing in the loan queue! That’s it. The process is simple and convenient.
Now, you have got the loan amount to accomplish your goal. Hey, how are you going to repay it? Those EMIs and those reminders to repay the loan! No, not at all. If you are not able to repay the loan, you can even pay only the interest for a month. You can repay the loan as per your convenience. So, gold loan is the only facility which provides convenience with regard to application, approval as well as repayment. If you have surplus funds, then you can repay it immediately. Moreover, you need not have to pay prepayment charges for it.
The interest rate charged for gold loans is comparatively low as compared to other loans.
Cons of taking gold loan – just emotions
You have taken a gold loan and done with your work. And now, you are repaying it as per your convenience. Next Sunday, it is your friend’s wedding. Your wife is complaining that she cannot wear her favourite gold necklace on the day. No gold, no flaunting! And you convince her nicely that in these days, it is better not to take the risk of wearing gold ornaments. It has become risky to store physical gold. If you are storing it in your bank locker, then you have to pay for the locker charges. With great difficulty, your wife agrees to wear the imitation one!
Well, another drawback of gold loan is that you are paying interest for a long time unknowingly. You are paying low interest but for a relatively longer duration. So, you may end up in paying more interest as compared to other loans. You need to be alert while paying interest on time. And you have to be responsible for repaying the loan amount as you get funds. In case of other loans, the EMIs act as compulsory notification for you and your loan amount gets repaid.
Thus, gold loans are good for fulfilling your urgent needs of money. Just be alert and disciplined!
Very true. Gold always comes handy. When one is in urgent need of money and needs liquid cash, one resorts to the gold they have. Moreover the value of gold will always increase with time. So even if you have bought you gold for a particular price, you end up getting more money against it. Best part is its quick to avail the loan and you dont have to do much running around. And you can always get it back, just the way it is.
Gold is seen as the best asset to possess during economic crisis as no other asset can live through the hard times so well, except gold. Not only common people but even the countries also try to stock gold during economic crisis. Banks provide the customers with the facility to take loan against gold. It is more convenient to take a gold loan than to go for a personal loan as the rate of interest is lower because gold loan is a type of secured loan. A good amount of pros and cons are attached to this type of loan option. The article above has talked well about both.
Gold being the most liquid asset can be easily exchanged for cash. This fact attracts many people to the gold loan schemes. Gold loan helps people to meet their urgent short terms cash requirement. However, gold loan should not be taken without proper study of the market. Gold loans are affected by fluctuations in the gold prices. Investigating in gold ETFs is also a good option as it is managed by mutual fund institutions. Besides they are equally liquid as real gold, they can be easily sold for cash and there are no sales tax, securities transaction tax, VAT or wealth tax.
I agree with the point of going for gold ETFs. The main issue with physical gold is idleness and no returns (except when you sell it which no one does except when in extreme circumstances). Gold loans have now become popular and is gaining recognition thanks to institutes like Mannapuram Gold Loans which are endorsed by famous personalities. The ultimate power however lies in the hands of the borrowers. Use your jurisdiction before taking any steps as long term benefits should not be endangered to fulfill the short term demands.
Gold loan is slowly gaining recognition in the financial market. The most handy item for extracting out some instant liquid cash is your gold reserves in your almirah. The best part about the gold loan is the easy return policy and an instant service. Of course, there are no pros without cons. So you need to be careful regarding some facets of the loan system before going for one.
While some of us buy gold as an accessory; some of us buy it as an asset. Having called gold as an asset, many of us use it as an emergency source of finance. Though there are a number of advantages in going for a gold loan, there are quite a few disadvantages as well. Thanks to the author for bringing in light both pros and cons of taking a gold loan as it is highly beneficial in planning when a gold loan must be taken and how it can used to the maximum extent
If you have no emotional attachment to your gold items, then there should be no cons associated with a gold loan. I have heard of people taking their jewellery to pawn shops to secure a loan on them, but it’s best to take it to a proper financial institution so you know your gold will not be sold to another person while you are in the tenure of the loan.