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Is gold loan good or bad?

Is gold loan good or bad?

For instance, a gold loan can be a better choice if you can repay the loan in a shorter duration and have a lower interest rate. On the other hand, a personal loan would be better for a longer tenure & higher loan amount. You must thus compare both loans depending on the requirement of your financial needs.

Is gold loan a good option?

Gold loan repayments have more flexibility than personal loans. These are accommodating to customers because a secured loan always guarantees payments on time. While the EMI payment option is standard and basic, you can pay the interest per month and the principal at the end of the loan tenure

Is gold safe in gold loan?

  • Image result for is gold loan is good or bad Not checking creditor's credibility: A gold loan is a secured loan, which implies that it is protected by collateral (gold in this case). This collateral remains with the creditor or lender till the loan amount is completely paid off.
  • you can get an Interest-free loan against Jewelery! Interest-Free Gold Loan is structured specially to mitigate various personal desires and needs of the individuals.

What are the disadvantages of using gold?

  • Buying physical gold brings in a problem of storage.
  • Gold prices can be volatile in the short run.
  • One may have to pay brokerage fees while purchasing gold ETFs and shares.
  • It has been observed that when the stock market goes up, gold prices go down

Features of a Gold Loan:

  • The loan may be provided within ten minutes.
  • The documentation process is simple and most lenders will only request for address proof and identity proof.
  • You can pay only the interest part initially and pay the principal amount when the loan matures.
  • Your credit history need not be good to opt for a gold loan.
  • As we said that a gold loan is a kind of secured loan, it can come at a lower interest rate than most other loans. As you will be submitting your gold to the lender, they face a much less credit risk while giving you the loan amount. And this is the reason behind the low-interest rates.

Why do people take gold loans?

  • Being a secured loan, gold loans are generally subject to lower rates of interest as compared to other financing options such as personal loan, home loans or other secured loans.
  • The loan amount is decided on the basis of the LTV (Loan to Value) ratio. This ratio varies from lender to lender and goes up to a maximum of 80% of the value of the pledged gold. This means that if the market value of your gold is Rs. 5 lakhs, you can get a maximum of Rupees.

Is gold a safe option?

  • The price of gold tends to remain stable over long cycles and it is considered to be a safe investment option. Over a three-five year period, gold has offered an annualised return of 10-11%. The real test of gold, however, comes at a time when interest rates increase because that's when gold prices come under pressure

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