In this era of rising inflation rate, the Reserve Bank of India is forced to play spoilsport by raising the interest rates on loans. This means that borrowers who earlier had to pay higher amounts on the loans that they had borrowed earlier, will now have to pay even higher amounts. If you are a borrower of a home loan then your finances might get a little taxing. In case of interest rate hikes you will either get to pay higher EMIs on your loan or may get to increase the tenor of your loan.
In such situations, most borrowers may not have the resources to accumulate funds to prepay their loans. Liquidating assets like Fixed Deposits, Mutual Funds etc. may not be profitable at all times. You can consider this step only if there is a reason to believe that the interest rate that your assets earn, are more than the current inflation rate. Only then repayment can be a possible option.
If the above prospective is not your scene, then most borrowers may end up into a blunder of borrowing another loan to repay the previous loan. This is not advisable since in these high interest rate scenarios your debt is likely to accumulate over time which can make things difficult for you in future. Then what can be the cheaper options that can help you in such difficult financial times? Loans against your gold jewelry can definitely be considered.
Gold is one of the abundantly available assets by people all over the country. Not only it is a commodity that has a high liquidity, it also enjoys high prices and is acceptable worldwide. Pledging gold against any financial and non-financial banking institution can give you good returns at good interest rates and are also quite cheaper to avail, than compared to the unsecured loans being provided by banks.
Banks and Non-Banking Financial Institution (NBFCs) offer loans against the pledged gold up to the rate of 15%. The reason why Gold loans are preferred than compared to the personal loans what banks offer is because personal loans are being provided at the interest rate as high as 25%. This interest will depend on your job profile and the loan amount required. If you are in top most favored companies in the banks’ list, you will be entitled to a better interest rate if not you might face the brunt of steeper interest rates. If you do not have a stable job profile and are not found to be consistent in your professional life, you may have to face the news of a rejected application.
In case of a gold loan, not only do you get a high liquidity, you are also benefitted with quick and easy loan disbursals against your pledged gold, within 5 minutes to an hour, at nominal interest rates. Apart from that the processing fees that you will have to pay will be somewhere around 0%-0.5%. If it is the case of a personal loan, you might have to shell out at least 2% as the processing fee on your loan.
Generally, you need to not list out the details as to what is the purpose for which you require the loan. However if the manager in charge finds an element of speculative activities involved, your loan will not be sanctioned.
Gold loans are generally expected to fund your requirements for a short period, say for a maximum of 1 year. All you require is proofs of identity like your passport copy or voters ID card or driving license, address proofs like ration card or telephone or electricity bill and signatures like passport copy or banker’s verification or cheque, etc.