Gold has evolved as one of the favorite commodities over the past many centuries. Even the early civilizations had recognized gold as a precious metal. Be it buying, gifting or investing, gold finds high applicability Worldwide.
With specific festivals dedicated to buying gold like Dhanteras, there is a huge market for it. Although demonetization dented its value, this precious metal still holds high rapport and affinity in the Indian culture.
Gold is not just a possession but you can also borrow against it. Gold loans are a secured type of loan where gold serves as collateral or security. These loans are available at around 75% to 80% LTV (loan-to-value) of the pledged gold. Gold loans are a blessing for the people who wish to improve their credit score.
Here are some insights into the Gold loan and how it can help improve your credit score. Want to know more on Gold Loans? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.
A gold loan is a secured loan that is provided in lieu of gold articles pledged by the borrower. The pledged articles need to be of at least 18-carat purity to serve as collateral. Gold loan is one of the best and easiest ways to get money in a financial emergency. People generally opt for a gold loan when money is needed in a hurry.
See Also: Gold Loan Interest Rates
Following are some of the reasons why people opt for gold loans:
As mentioned in the last point above, gold loans help improve your credit score significantly. Why is a credit score important?
A credit score is a reflection of a person’s creditworthiness in terms of numbers. Ideally, a credit score of 750 is desirable to take a loan from financial institutions, but in case you have a lower credit score or no credit score, gold loans come handy. As the approval process and documentation are minimal and the collateral has already been pledged, gold loans do not require credit score.
However, when you have taken a gold loan over a certain tenor, you are expected to make regular repayments against the loan or credit score is affected.
See Also: Gold Loan: All You Need To Know
As you gradually make the repayments, your credit score improves with time providing you with an appreciable CIBIL score.
Gold loans must be treated cautiously. Although they serve as an excellent tool to improve the credit score, aiming for a higher loan in the same light can prove fatal. If by any chance you are unable to repay the borrowed amount, your credit score gets impacted. Hence, exercising due diligence helps reap the desired benefits from a gold loan.
See Also: Advantages of Gold Loan
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