With the increase in information, many people began to realize the power that the yellow metal-gold holds. Gold has always been an asset that can be easily liquidated. The reason is because of its universal acceptance as a currency. It is the only asset which can be purchased by any person regardless of their physical location.
In case of emergencies, after having exhausted all your options of procuring friends, you may finally decide to pledge your gold and avail the required amount. Instead of taking your gold to a private financier or a money lender who will charge exorbitant rates of interest; varying from 30% -50% and may just give you half the amount for the value of gold, pledge your gold with financial institutions like banks or non banking financial institutions like gold loan companies.
When you pledge your gold with banks and other gold loan providers, you can be assured of the fact that you will get the loan amount as per the complete value of gold as on date. Apart from that you will be charged a nominal rate of interest and enable you to pay the loan in nominal Equated Monthly Installments (EMIs).
The gold loan can be easily availed with minimal documents. The loan is also disbursed very quickly which can help you tremendously when it comes to the shortage of time in hand. This is one of the most profitable options, in comparison with the personal loan, credit card loan etc. Although it is also quite easier to avail personal loans, it may be quite difficult to get them at a comparatively low interest.
Documents required:
- Voter ID
- Passport
- Ration card
- Driving License
Any one of the above mentioned documents will be required for you to show as a proof for you to walk away with the required amount in case of any emergencies. Also, with the increase in the number of competitors for providing the same, most non banking financial companies (NBFCs), have come forward to provide the gold loan services during weekends and also claim to provide higher loan amount against the gold you pledge.
The amount lent by different financial and non financial institutions may differ depending on their policies and margin requirements. Pledging gold with the bank can give you a loan amount of up to 75% of the total gold value. But this is not the offer what Non- banking Financial Institutions (NBFCs) have to provide. Pledging gold with the NBFCs can give you a loan amount as high as 85% depending upon the purity of the loan. But it is not only the value of the gold that will be taken into consideration for your loan application to get approved. Your income ability and repayment capacity is also taken into consideration and then the appropriate loan amount will be sanctioned.
However the rate of interest varies in between each institution. If you are pledging your gold with the bank you will be charged interest from somewhere between 12%-18% and if you pledge your gold with Non banking Financial Institutions (NBFCs) then you will be charged as high as 24%. However, the interest rate depends upon the loan amount and the tenor that goes along with it.
The best thing is that there is no set minimum time period within which you need to repay your loan amount within. If you have the finances, you can even repay your loan the very next day you were sanctioned the loan. This is quite pleasing since you are not charged with high pre payment penalties which would have been otherwise in case of other traditional loan repayment procedures.