Gold Loan Benefits

Indian’s love for gold in known to the world. We are the biggest importers of gold in the world. Gold is not only the store of value but has also seen good amount of capital appreciation over the decade. But did you know that you can use this gold to fund your emergency cash requirements such as medical emergency, child education, business expansion, down payment for the purchase of vehicle and holiday with your family.  If you are in a dire situation and need cash urgently, you can utilize the ideal gold lying in your locker to fund the emergency cash requirement. Many banks and non-banking financial companies (NBFCs) offer gold loans. These loans are one of the quickest and hassle-free ways of getting instant cash. You can get the loan against the gold in any form whether jewelry, gold coins, bars and biscuits.

Following are the plethora of benefits that gold loan offers.


  • Faster processing: – As the gold loans are backed by physical gold, the bankers are generally more than happy to give loan.  Lending against gold is safe for the banks as they have the option to sell the gold in case you default, therefore banks generally disburse the loan in few hours.   This is because the processing time is less.
  • Option to pay interest only: – Gold loans have a unique feature where the borrower has the option of paying just the interest part and the principal amount can be paid at the time of the closing of the loan.
  • Lower interest rate: – As these are secured loans banks charge a lower interest rate compared to unsecured loan such as personal loan. The interest rates are generally in the range of 13 to 14% while personal loan generally starts with an interest rate of 15%. Also, if you attach another security as collateral, the gold loan interest rate can be reduced further.
  • No processing fees: – Many NBFCs and banks don’t charge processing fees as these loans are given instantly in lieu of gold which is held as collateral with the lender.
  • Low or no foreclosure charges: – Some of the lenders don’t charge any prepayment charges while some of the banks do charge a prepayment penalty of 1%.
  • No-income proof required: – Generally lenders don’t ask for income proof as the loan is secured against the gold to keep with the bank.
  • Bad credit history not an issue: – Unlike other loans where the loan amount is given depending on the repayment capability and credit history, the case is different in case of gold loan. As the gold is used as collateral, the lenders are not worried about the principal component and thus don’t check the credit history of the borrower.
  • Safety of gold: – The onus of the security of the gold lies with the lender. It will remain safe in its vault, you don’t have to worry about that. After you repay the loan you will get your gold back.

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