Gold Overdraft Loan: When it comes to gold, we understand the important role it has played in our culture and traditions for centuries. Its prices have steadily risen over the past few years, leading people to invest in it. This is because investing in gold provides reliable returns over time. Gold loans have emerged as a popular collateral loan option these days. Rising gold prices and increasing demand have made gold loans a viable option.
With a gold loan, you can borrow money from the bank based on your needs by providing it as collateral. Banks offer two types of loans against gold: gold loans with overdraft facilities and gold loan EMI options. With an overdraft gold loan, your gold is pledged to the bank or financial institution. In return, you receive an overdraft account, which holds an amount equal to your loan . You can withdraw funds from this account as needed. You can use both of these options based on your needs. Let’s explore which options should be chosen by whom:
What is Gold Overdraft Loan Facility?
The Gold Overdraft Loan Facility has become a good option for quick access to money these days. This overdraft loan provides you with an amount equivalent to your gold. You also have to deposit your gold with a bank or company. You receive an overdraft amount equal to the value of your gold. You can use this overdraft like a credit card. You can withdraw funds as needed using the checkbook provided with your account. With an overdraft gold loan, you can withdraw as much as you wish. Interest is charged only on the amount withdrawn.
Advantages and Disadvantages
Once you receive approval for a Gold Overdraft Loan from your bank, you can use it like a credit card. You’ll pay interest based on the amount you use. This allows you to pay for shopping, credit card bills, money transfers, and other bills. Approval for this Gold Overdraft Loan is easy, with minimal paperwork, and easy access to the overdraft amount.
Gold is a market commodity, and its price fluctuates with market fluctuations. Furthermore, if you don’t repay your gold overdraft loan on time, you could lose your gold. This gives you a lump sum and EMIs. If you need less money now and more later, you may need to take out another loan.