Gold loans are best suited for which type of borrowers?

This is a very good question. We know why people consider taking a gold loan:

- Easy liquidity

- It is easy to get a gold loan

- Requires less documentation

- It is quicker than other loans

- Most of us already own physical gold

But there are categories of people for whom gold loans are best suited and these are:

- Individuals with no income/salary

You could be an individual with no income and you could still get a gold loan. This is because unlike other loans that lend you money based on your income inflow, gold loans lend you money by keeping your gold belongings as collateral. Thus, they don’t care whether you earn or not or even how much you earn for that matter. Once you give your gold as a collateral, they’re ready to give you money.

- Individuals with poor credit score

In order to ensure banks only lend to those individuals who are more likely to repay their money, banks loan you an amount ONLY if you have a good credit crore. For a good credit score you must have a good repaying track record- this could be a loan you’ve already availed or a credit card bill.

If your credit score isn’t good enough, banks will deem you a risky loanee with higher chances of default and hence, not give you a loan.

In such a situation, gold loan is a great saviour as an individual can get liquid cash without worrying about his/her credit score.

- Individuals who are in a hurry to get liquid money

Documentation for gold loans is probably the easiest as you only have to provide one proof of identity and one proof of residence. This means less processing and hence, quicker loan for you.