Advantages

Gold certificate not needed: Gold loan does not demand any certificate to show your salary or income, and no credit card history is required either. Thus, even unemployed and non-earning people can go for gold loan.

Less documentation: Unlike any other unsecured loan, gold loan does not require much paperwork. A few documents such as identity proof and address proof are enough to avail such a loan.

As personal loan: Gold loan from a few banks is available as personal loan at interest rates of 15 per cent to 18 per cent per annum.

Low interest for agriculture: In rural areas, agricultural loan against gold is also available for agriculturists at a nominal interest rate of 7 per cent to 8 per cent per annum. The applicant only has to produce proof of agricultural landholding.

Makes gold an investment: Gold is often referred to as ‘dead asset’ as it does not create/produce any other asset. By availing a gold loan, the ‘dead asset’ becomes a national resource.

Right value: You can get loan up to 80 per cent of the market value of the gold.

Pay only the interest: Borrowers have an option to pay only interest during the entire tenure of the loan (loan period) and at the end of the tenure they can pay back the borrowed amount as onetime payment (bullet payment).

Less processing time: In case of gold loan, the processing time is very less. Usually banks take just a few hours to complete the process, and in case of NBFCs, it can be availed in a few minutes.