Gold has a certain element of emotional value for all Indians. Taking personal loans against family gold had not been considered a preferable option till late, though the tradition of loan against gold had been in practice for centuries through unorganized money lenders.
The value of gold has been on the rise for the last one century uninterrupted and is currently touching unprecedented heights. Thus, it makes sense to utilize the power of the gold lying in lockers to avail loans instead of paying higher interest rates for pure personal loans. With banks and other financial institutions entering this space of late, there has been a marked increase in personal loans against gold among the Indian middle class.
What is personal loan against gold?
This is a simple modification of the age-old practice by money lenders and has been institutionalized by the banks now. In this loan one has to deposit the household gold in the form of jewellery with the bank or financing agency and get a loan of up to 80 per cent of the value of the gold deposited. The process also requires proper documentation such as submission of identity proof, PAN card, address proof, etc. The interest rate in this case is much lower than a pure personal loan as there is a security being provided by the borrower. The processing time for personal loans against gold is quite less as compared to other loans.
How is it different from a conventional personal loan?
Key benefits of personal loans against gold:
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