People in India have attachments with goal, they have their feelings attached with their gold, and either the gold is gifted by their parents or parents in law or by any other relatives or friends. Either they have feelings attached or they take the gold as their investment, a long term investment, which they never want to sell until and unless there is some urgency. Generally gold loan are of small tenure, maximum of one year in most of the cases.
But now people are changing their mind, they are becoming more open towards keeping their gold as security for loan for borrowing money from financial companies. These days gold are touching new heights, the price is been increasing continuously from last one century. People don’t know the power of the gold and keep it in their locker, now they are using the power of the gold.
Factors what are influencing people to take gold loan are:
In India, people have a habit of storing the power of the gold in their lockers, but if they will take this gold loan, they will be able to utilize the power of their gold.
As the value of gold increases year over year, you can borrow more gold with the same amount of gold because of increasing value of gold.
Gold loan is more secured, simple concept of finance, more the risk, higher the interest rate charged, as there is lesser risk involved in gold loan for lender, hence they will charge lesser interest rate on the gold loan. Hence you have to pay lesser amount in gold loan. You will be able to save your money by using your gold as security. Generally the interest rate ranges from 11% to 16%.
You can get loan of high percent as 80% of the value of the gold. Which is very high as compared to other kinds of loan. Hence you can use your gold in a better way to get higher amount of loan.
As you have learned that there are many benefits in borrowing money by using your gold as a collateral and you will be able to save your money also. So, now whenever you are thinking about loan, consider gold loan before making any final decision.