Financial planners insist to keep at least three months of expenses as emergency funds. However, not everyone is smart enough to follow these practices. As a matter of fact, many families cannot even afford thinking about these situations since many households rely on their daily wages to keep their life moving. So what to do during a financial emergency and how to deal with the situation?
Most individuals often opt for borrowing loans either through credit cards or personal loans to meet their financial crunches. However, financial strategists consider getting a gold loan is rather a smarter decision. Gold loans are usually offered by accepting the gold ornaments or jewelry as a pledge by the customer in return for cash. Gold jewelry is used as collateral for gold loans.
In the recent ages where security has become a problem, men and women hesitate to wear gold jewelry and most of their jewelries are often lying in the locker for months or even for years together. So, instead of taking other loans, or using your assets as collateral, you can go for gold loans and make use of your unused ornaments lying idle.
South Asian countries like India hold about 18,000 tons of gold privately. Out of which 70% are made into ornaments and jewelry. This report was recently released by the World Gold Council. When this gold is converted in terms of money it accounts for almost 30 trillion which is only 50% of Indian domestic products. So why not use this money when there is a crisis or during a predicate situation?
With drastic developments and changes in the financial sectors, many banking and non-banking financial corporations are bringing in a lot of new prospects to the customers and making gold loans truly inevitable. Gold loans are perhaps one of the best loans for the customers because it is offered with minimum interest with a much faster dispersal. Moreover, there is very little paperwork for processing this loan when compared to other loans.
Common Questions When Going For A Gold Loan
Are you thinking to apply for a gold loan then you should know a few things before applying for one?
Most individuals consider gold as a safety net in an event when currency fails or accumulating for financial security to stay safe in the future. Pledging gold for money is a common practice is not only in many Asian countries but also in countries across the world. When people are in need of money, this is often a much easy way to get cash. There are many gold loan program offered through banks that allows you to borrow money against the value of the gold.
However, it is not advisable to go for a bigger loan because as the amount goes higher, the interest rates are pretty hefty. At the end of the day, you will repay the money that will be double the value of the gold. So there are few things you need to consider before applying for this appealing metal loan
Know Everything About Gold Loan Program
The programs combine the security of the yellow metal with a prospective opportunity for investment. It also allows you to take money against the value of the gold that is safely secured in Zurich, Switzerland.
The Type Of Gold You Should Pledge
Banks and non-banking sectors offer loans for gold ornaments however, you can check for the option whether you will be granted loans against gold coins and gold bars as well. Not all corporation allow gold coins to be pledged. However some financial corporations like JP Morgan allow the clients to use the metals as collateral in some transactions.
The Amount You Are Eligible To Avail
Basically you can get 75-85% of funds against the value of the gold but it also depends on the purity of the metal. Hallmark jewelry perhaps worth better and are considered preferential gold for many banks.
To Sum It Up
In addition, you need to consider other factors like the loan terms (depends on the needs of the borrower), pre-payment charges and more so that you will not be slapped with unexpected charges later.