Gold Loans - The benefits


Gold today is not only utilised as an ornament which adds to a women's charm but is also seen as an appreciating investment vehicles. People normally like to invest in gold bars and biscuit and hold it in order to get higher returns in future when its rates have risen. Keeping in mind volatility in its rates many financial institutions have started valuing good as an investment tool on which even mortgage can be applied for. Loans which are granted on gold are often known as 'gold loans'. These tend to be cheaper than the loans granted otherwise. The obvious reason for this is that the ever spurting high rates of gold.

Gold loans have in the recent past become quite popular and many leading financial institutions are offering low rates on gold loans. The loan amount which is sanctioned often varies from one financial institute to another; however, the range is from Rs 1500-2100 per gm of gold.

If gold loans are compared with personal loans the difference is huge. Interest rate as far as personal loan is concerned varies between 14.5-19% and that of gold loan is 12-25%.There are several other charges in case of personal loans such as the processing fees of 2-3%, pre-payment charges which again is 2-3%. In case of gold loans there are no such charges. Above all the maximum loan limit is also greater in case of gold loans which is one crore compared to 50 lakhs for personal loans.

Evidently rates offered by gold loans are far cheaper than a personal loan. Let's compare the interest rates of a personal loan with a gold loan.

Another distinguishing feature in case of gold loans is that the interest rate may be flexible and you can get a cheaper gold loan if you attach a collateral security. In simple language it means that higher the security of the loan lower will be the interest charged. Not only do gold loans work out to be cheaper but can also be obtained by providing security possessions of your known such as your parents, siblings or children.

Therefore gold loans have become widely acceptable which not only provide loans at flexible rates but are also cheaper.



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