Unique aspects of Gold Loans that everyone must know
Since its beginning, gold has attracted all the civilizations throughout the globe with its attractiveness and domination as the primary medium of exchange. It has represented the pride of its owners throughout the time with its natural beauty, purity, power, and accomplishment, and it continues to do so.
In India, its power can be understood because, at present, gold worth $1.5 trillion is held privately in India, which is at its all-time high, and it will only increase with time.
People have recently felt a stronger need to keep their money safe after witnessing every financial meltdown, such as the dot-com bubble burst, housing crash, and pandemic. They chose to hold on to assets that do not lose much value while combating inflation at the same time. And this is where gold comes into the equation and becomes a perfect match.
God's true money, aka gold, comes with enormous advantages :
- Gold has been a stable commodity throughout time and has protected people from fear and financial disasters during volatile and unpredictable times.
- Gold has been more stable as compared to its peer metals such as silver and copper.
- Gold has been an excellent hedge (protection) against inflation throughout the time, as its prices increase over a long period.
- Gold is negatively correlated with other classes of assets such as stocks and real estate. This means that when the price of these assets falls, the price of gold rises, making it a great diversification tool.
- Gold is much easier to understand and invest in as compared to other assets like stocks, private investments like startups, government and corporate instruments (such as leases and bonds), derivatives (such as currencies and forex), and assets based on blockchain (such as cryptocurrencies and NFTs).
- In modern times, you can even get loans against gold (known as gold loans) at extremely modest interest rates.
- Thanks to the internet, you can now buy gold virtually in digital lockers, which work like Demat accounts of equities, are backed by real gold, and are completely secure and insured. This also reduces the burden of storing and carrying physical gold and its associated risk of getting stolen or lost.
When it comes to investing in gold, one of the biggest advantages it holds over all other assets is its power of leverage in the form of debt. Gold is the only asset that you can keep as an investment by a layman, and money can be borrowed simultaneously. This way, you can get access to money when you need it without selling and realizing your investment.
Gold loan is something not many people know about, and even fewer people use it. Indian households keep a significant quantity of gold in jewellery, gold bullion, and coins. Still, they hesitate to get gold loans when in need due to various misconceptions, including :
- They will have to bear highly high interest rates and huge processing charges.
- They will not get sufficient money in the form of debt compared to their gold value.
- There will be many fine prints and contractual formalities that they will be unable to understand.
But these misconceptions do not hold, not at least anymore. They are getting gold loans that have become easier and more affordable than ever before.
These are the lesser-known aspects of gold loans that an ordinary person is generally not aware with :
- Finance companies providing gold loans charge very affordable interest rates on their debt, sometimes less than even 1% p.m.
- Customers get a fair amount of loans compared to the quantity of gold they keep in the form of security.
- There is no processing fee to process the transactions related to gold loans.
- Customers do not have to sign lengthy contracts they cannot even go through, lest you understand, as such documents are now more simple, shorter, and easier to understand for a layman.
- The related loan transactions are easy and smooth.
- Money approved in the form of a loan gets transferred directly to your bank account.
- The gold that you keep in the form of security is ensured by the company approving your loan.
- You get the liberty to repay the loan in the form of upfront one-time repayment or spread the repayment in the form of periodical EMIs, as per your convenience.
The process of securing such a loan is very user-friendly as well. Getting a gold loan generally consists of these five simple and easy steps :
- When you request a new gold loan at a finance company offering gold loan services, advisors help you navigate the complete process.
- The loan manager reaches out to you at the comfort of your home to take your application further for processing, which is generally simple and speedy.
- Once the application is processed and approved, the amount of loan sanctioned gets transferred directly to your bank account, and your gold is sealed safely.
- The gold you use as the underlying security to secure the loan is kept safe in highly secured lockers and is insured by the bank as soon as it leaves your house.
- Once you repay the loan completely, the gold that you kept with the bank, in the same form as you deposited it, is returned to your house free of cost.
Some finance companies dealing in gold provide both services under one roof, i.e. storing gold in digital lockers and providing gold loans.
Companies like India gold provide these services at one-stop and enable you to convert your digital gold into physical gold. And if you decide to convert your digital gold into physical gold, it delivers this converted gold at your house as well, without any additional charges, i.e. free of cost.
Enjoying any or all of these services is at your fingertips with indiagold.