A few reasons for the popularity loan against gold are as follows:
- Gold loans feature a low interest rate as compared to most other loan options.
- Gold Loans tenure ranges from a few days to 5 years or more depending upon the lender.
- The repayment options on gold loan can be selected as per the choice of the borrower.
- In most cases, the lender does not charge a pre-payment penalty on gold loans.
- Minimal documentation required and PAN Card is not mandatory for this loan.
- Fast disbursement i.e. loan is provided within a few minutes to a few hours.
- It is a secured loan. Therefore, there is no requirement of a good credit history to avail a gold loan.
- You have an option to pay only the interest component and the principle can be paid as a lump sum amount at the end of the loan tenure.
- For those of you involved in agriculture, gold loan schemes can be availed at a reduced rate of interest which can be as low as 8%.
- Since your gold is the collateral, which is deposited with the lender, the paper work involved is bare minimum. All you require is your personal id and address proof.
- The loan disbursal time can be as short as 5 minutes.
Most gold loan providers charge only a small percentage, usually 3% to 5% over the base rate when providing a gold loan. Thus for a base rate of 9.5%, the interest on a gold loan can vary from 11%-13% per annum. Gold loans feature a tenure that ranges from a few days to 5 years. The loan interest rate also tends to vary based on the tenure of the loan as well as the gold loan amount.