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The yellow metal (GOLD) is the easiest way to borrow money

 

 

GOLD is considered to be one of the most liquid assets in the world. The reason is simple — it is accepted as a universal currency and finds a buyer in virtually any corner of the earth. So, when you want to borrow in case of an emergency, the yellow metal is one of the easiest way out.


   The traditional and ancient method was to pledge your ornaments with a jeweller and borrow from him. He would, in turn, keep the ornaments and lend you a certain amount of money, depending on the valuation. Typically, he would lend you an amount equivalent to 50% of the value of gold you pledge and charge you a hefty interest, which could start from 30% and go up to 50%. However, these days, there are several different options available. Individuals can avail gold loans from private sector banks or even NBFCs.


   There are companies like Manappuram Finance and Muthoot Finance that specialise in gold loans and claim to offer you finance against gold in five minutes, with minimum documentation. All you need is either one of these: voter ID, passport, ration card or driving licence, and you could walk away with the needed emergency cash. In fact, some NBFCs are also open on Sundays and claim to give a higher percentage of loan against ornaments.


   While banks would typically not give more than 75% of the gold value as loan, NBFCs may give as much as 95% in case of high-purity gold. Gold loan is typically sanctioned by accepting the ornaments as pledge. Based on its value, a personal loan is sanctioned on the basis of the applicant's income and repayment capacity. The interest rate could depend on the tenure of the loan, its duration and amount. It could vary from 12-18% in case of banks, while in the case of NBFCs, it could go up to 24%, depending on the scheme you opt for. There is no minimum period for the loan and if need be you can return the loan amount the very next day.

 


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