For generations, gold has held a special place in Indian homes, serving as an essential asset class and sentimental heirloom. During times of need, these otherwise idle gold ornaments and coins can prove value unexpectedly - by providing access to financing through gold loans.
Gold loans allow individuals to access money quickly by keeping their gold as collateral rather than selling it and losing ownership. While gold loans have existed for decades through banks and Non-Banking Financial Companies (NBFCs), online gold loan platforms have added immense ease and flexibility to this borrowing option.
This article will help you explore 7 use cases of a gold loan.
Benefits of Using a Gold Loan
Let us look at the top two significant benefits of using an online gold loan
1. Better and Quicker Access to Funds
A gold loan is a secured loan. Financial institutions hold your gold assets as collateral. They usually charge a lower interest rate on gold loans than other personal loans. Gold loans are typically financed quickly, making them a preferred option for funding urgent financial requirements.
2. No Restriction on Usage
Financial institutions usually do not ask for your loan amount usage plans. This allows you to use the proceeds of your gold loan as required. Once the gold loan is approved and disbursed to your account, you can use the funds for any legal purpose - business investment, higher education, medical treatment, home renovation, wedding expenses, or anything else you may need.
How Can You Use an Online Gold Loan?
A gold loan can fulfil several needs thanks to its flexible nature. Here are some of the top uses:
1. Funding Children's Education
In India, educational costs have risen sharply, especially for higher studies. A gold loan provides funds for college fees, hostel costs, overseas education, and related expenses. You can repay the loan over several years through Equated Monthly Instalments (EMIs) instead of liquidating your gold immediately.
2. Managing Medical Emergencies
Healthcare costs can rapidly escalate for treatment of critical illness or surgery. A gold loan provides quick funds to manage hospital bills without impacting other savings. Repayment can be done later once normal cash flow resumes.
3. Expanding Your Business
Gold loans provide growth capital for small business owners to invest in equipment, inventory, or a new product line. The loan comes at a lower cost than commercial business loans since it is secured. Monthly instalments help to repay the amount based on revenue generation.
4. Renovating or Constructing Property
Home renovation projects or constructing a new property can require substantial capital. With a gold loan, you can complete your renovation projects and repay them in instalments later. This avoids exhausting all your savings or selling assets immediately.
5. Funding a Wedding
Indian weddings typically involve high expenses. With a gold loan, you can access funds for wedding costs, including venue, catering, decor, and other expenses. The loan allows you to host the wedding smoothly and repay over time.
6. Planning International Vacations
A dream vacation to an international destination often requires significant money. Instead of exhausting your savings, you can take out a gold loan in India, which will provide the finances you need to fund a memorable overseas holiday. You can repay the loan in instalments later.
7. Consolidating Existing Debts
Many people use online gold loans to consolidate multiple debts, such as personal loans and credit cards. This simplifies repayment through a single EMI at a lower interest rate, saving on interest costs.
The Bottom Line
Gold loans provide a convenient way to unlock the value of idle gold ornaments in your locker. Instead of selling gold to generate funds, you can retain it and take a loan against it. Gold loans offer flexibility to meet business, personal, or other needs at attractive interest rates. You can optimally utilise your gold assets by choosing the right loan provider and by ensuring timely repayments.
