What Is Digital Gold Loan?
India’s houses have pieces of gold just sitting in their lockers. But the good news is that you can use them when you need them. When you need money quickly, you can use your gold items to pay for your immediate needs. Not by selling your gold but by giving it as collateral to a place that lends money. Many banks and non-bank financial companies (NBFCs) in India offer gold loans with attractive interest rates.
Moreover, digital gold is the cherry on top and gives people attractive gold loans. But before applying for a digital gold loan, you should know the features and benefits of these types of loans. This post goes into more detail about these things.
What is a Digital Gold Loan?
Digital gold is a new way to buy gold that doesn’t require holding. You can easily and quickly buy it online from the comfort of your own home. The least amount you can buy or sell is Rs. 10. You can buy and sell gold around the clock, even on weekends and holidays. People can avail themselves of a loan against their digital gold.
Borrowers can get their digital gold loan money at their front door. If they have gold to use as collateral for a loan, a lending executive may come to their home, figure out how much it’s worth, and give them the loan in as little as 30 minutes.
Features of a Digital Gold Loan
Some of the most important features of digital gold loans are:
Attractive Interest Rates
Digital gold loans are secured loans. The interest rates are lower than those for loans without collateral.
No Need for a Good Credit Score
For gold loans, lenders don’t need to know your credit score or how much money you make each month. The loan’s value is based on how much gold was used as collateral.
Safety
Lenders keep your gold pledges safe by putting them in solid vaults. Once you pay back the loan, they give it back to you.
Loan-to-Value (LTV)
The Reserve Bank of India (RBI) has set the maximum LTV ratio at 75%. So, if you put up Rs 1 lakh’s worth of gold as collateral, you can get up to Rs 75,000 as a gold loan.
Little Paperwork
You only need your ID and proof of address to apply for a gold loan. This is part of the “Know Your Client” (KYC) process. Lenders don’t need proof of your income or bank statements to figure out if you qualify.
Versatile End-Use
You can use the money from the loan to pay for anything you want without having to worry about end-use restrictions.
Fast Processing
Processing is faster, so you can get the money you need in minutes. The lender calculates the value and immediately gives out the loan amount.
No Foreclosure
There are no fees for foreclosure or paying off the loan early. You can pay back the principal and interest on your gold loan at any time without worrying about foreclosure or early payment fees.
Benefits of a Gold Loan
There are many good things about gold loans that make them an attractive way to get money. Among the most popular are the ones below.
Benefits of a Secured Loan
Most loans either have collateral or don’t. Unsecured loans don’t require collateral, but there are strict rules about who can get them. Since a gold loan is secured, the lender will want something in return. But they usually make it easy to get a loan. You don’t have to show proof of income to get a high-value loan. Plus, because of the gold, lenders charge less interest.
Adaptability
When you apply for a digital gold loan, you only have to show that you have gold in the form of coins, jewelry, etc. You can still get the loan even if your credit score is low. Many gold loan lenders do not care about your credit score, which is why these loans are so popular.
Using the Same Gold Repeatedly
Once you’ve paid back your gold and gotten it back, you can use the same gold to get another loan. Since the gold loan amount is based on how much gold is worth on the market, you can get a bigger loan if gold prices go up.
Flexible Repayment Terms
Gold loans are not amortized, meaning you don’t have to pay the interest and the principal in each EMI. Instead, you could only make EMI payments on the interest during the loan’s term and pay off the loan’s principal in one lump sum when the loan is paid off. Because of this, a digital gold loan is a great option that is easy on the wallet. You can also pay back some of the principal amounts before the loan is due, which will lower your interest.
Steps to get a Digital Gold Loan
1. Application
The application is the first step in getting a loan. This is done online in the case of a digital gold loan. Borrowers fill in the basic information, like their name, age, gender, home address, and cell phone number. After that, a lender’s representative will contact them and show them what to do next.
2. Evaluation
The lender will send an executive to the home of the person who wants to borrow money so that the gold can be valued. Once this is done, the official will provide the loan, usually between 60 and 75% of the gold’s value.
3. Disbursement
Once the lender approves the loan amount, the money will be sent to the bank account in as little as 30 minutes. The process is quick and easy.
Conclusion
Since the COVID-19 epidemic, most things in life, including gold loans, have moved to the digital world. It’s only a matter of time before they become popular and replace traditional payment methods as the norm.
Borrowing a digital gold loan from a trustworthy lender like Piramal Finance is a quick and easy online process that only takes a few minutes to finish.
Want to know more about digital gold loans? Visit Piramal Finance and explore the different options they offer!