Gold Loan For Medical Emergency Guide

1. Introduction

• Rising medical expenses and sudden emergencies: Globally, the medical inflation is rising, which essentially means that the cost of medical procedures are rising at a fast pace. This in silos is a bad news for individuals, and more so if you’re underprepared for any sudden medical expenses since emergencies are a part of life and can quickly drain your savings and put you in a financial crunch.

• Need for quick and reliable financing: To cover medical expenses or sudden emergencies, it is prudent to have a source of quick and reliable financing which can be used to cover such expenses and pull you out of such financially draining situations.

• How can gold loans help during medical crises?: Gold loans are a great way to avail quick and inexpensive loans to fund such medical expenses in emergencies. These are a very reliable source of financing, which are becoming even more attractive since lenders like indiagold offer extremely competitive rates and also provide borrower friendly repayment options and convenience features.

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2. Understanding Gold Loans

• What is a gold loan?: Gold loans are a type of asset backed loans where the borrowers pledge their gold as a collateral to the lenders in order to avail a loan. Once the loan is repaid in full including the principle, interest component, and any applicable charges, the gold collateral is given back to the borrower!

• How gold loan works for medical emergency: Gold loans are an extremely reliable way to avail funding in an event of a medical emergency. Considering the fact that having a quick access to funds is extremely crucial, gold loans prove to be extremely helpful since the borrowers can avail loans at an extremely quick pace without having to fulfill prerequisites like a lengthy application process or eligibility check as is the case with other forms of loans.

3. Why Choose a Gold Loan for Hospital Bills or Medical Emergencies?

• Fast processing and quick disbursal: Gold loans as opposed to the traditional forms of financing like personal loans offer an extremely fast processing and quick disbursal. This is due to the fact that gold loans require less eligibility checks and the assessment process is usually completed in a matter of minutes. Thus, allowing the lenders to pass on the benefit to the borrowers in terms of quick and timely processing of loans. Lenders like indiagold offer an extremely quick assessment process and disbursal in under 30 minutes! Making gold loans a no brainer for accessing quick funds.

• Minimal documentation: Gold loans also require minimal documentation for application and processing, thus helping with the processing speed.

• Lower interest rates compared to personal loans: Gold loans are highly cost effective when compared to personal loans. These usually attract an affordable rate of interest, making these a great and affordable option especially in the event of a medical emergency.

• No income proof required in many cases: Since gold loans are collateral backed loans, these require no income proof in many cases since the borrower’s gold acts as a risk hedge for the lenders.

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4. How Much Loan Can You Get Against Gold?

• Loan-to-Value (LTV) ratio explained: The loan-to-value (LTV) ratio is a measure of the maximum amount of loan that can be availed in proportion to the value of the collateral. A higher LTV translates to a higher maximum loan amount eligibility and vice versa. For example if a lender offers a LTV ratio of 70% and the market value of the gold collateral is INR 1,00,000 then the maximum amount of loan that can be availed against the said collateral will be INR 70,000. As per the guidelines set forth by the RBI, the maximum LTV that can be offered is 75% and the lenders like indiagold typically offer one of the highest LTV ratios in the gold loan industry.

• Factors affecting loan amount: There are many factors that affect the maximum gold loan amount. Some of the factors are the LTV ratio offered by the lender, purity of the gold collateral - High purity collateral will fetch a high loan amount and vice versa, weight of the collateral, and the market value of the gold - Borrowers are able to avail a higher loan amount if the gold price is high and vice versa.

• Impact of gold purity and weight: Gold purity and weight impacts the market value of the gold, which is tied to the LTV ratio and directly impacts the maximum amount of loan that can be availed. A gold collateral of high purity and weight will fetch a higher loan amount and a collateral with lower purity and weight will fetch a lower loan amount for the borrower.

5. Step-by-Step Process to Apply for a Gold Loan

• Gold evaluation: The foremost step of gold loan application is the gold collateral evaluation. The lender evaluates the gold’s market value and based on their policies, evaluates the loan amount.

• Document submission: Once the evaluation is completed, the borrower then submits their documents like PAN card, identity and address proof, and any other documents as required by the lender to complete the documentation process.

• Loan approval and disbursal: Based on the results of gold evaluation and documents submission, the loan application is approved/rejected and upon approval the amount is disbursed to the borrower’s bank account.

• Safekeeping of pledged gold: Upon completion of the assessment and documentation, the custody of the gold collateral is taken by the lender.

6. Risks and Precautions to Take

• Risk of losing gold in case of default: One of the biggest and most overlooked risks of gold loans is that in an event of default, the lender reserves the right to liquidate the gold to recover the dues. A proper process is followed in such cases and the borrower is given sufficient and multiple reminders to pay the dues before proceeding with the auction.

• Understanding terms and conditions: It is crucial to understand the terms and conditions in the lending contract before availing the loan. This saves the borrowers from any future surprises and safeguards the interest.

• Choosing a trusted lender: Choosing a trusted and reliable lender is extremely important. Lenders like indiagold have a proven track record and a great reputation in the gold loan market due to their borrower centric features and gold loan offerings.

7. Tips to Use Gold Loans Wisely During Medical Emergencies

• Borrow only what is necessary: Responsible borrowing is crucial. It is prudent to always borrow the amount that you actually need. Over-borrowing often results in financial difficulties, and trouble in repayment for the borrower, often leading to loss of collateral due to default.

• Plan repayment alongside treatment costs: Planning repayment can be extremely helpful. Doing so while keeping the treatment costs, and repayment comfort in mind can be extremely valuable.

• Keep track of deadlines: Keeping a track of deadlines can help repay efficiently, and avoid any delays. This can help save money which would be otherwise spent on delayed repayment charges, and risk missing a repayment.

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