We will be able to know why loans against jewelry have become popular.
- Elaborate Processing Procedure
When
people take personal loans, the banks and other financing agencies
remain skeptical. They wish to ensure that the borrowed amount will be
repaid in due course of time. Since they do not have anything that
guarantees this, they ask for lots of documents and proofs.
Consequently, case of gold loans.
- Guarantee Becomes an Issue
When
people take personal loans from financial institutions, they do not
have any collateral. But gold loans have your jewelry as the most
dependable security for the financial organizations. Thus, the interest
that is charged against the borrowed amount is comparatively higher in
case of personal loans.
- Hidden Charges Exist
Now
you can imagine the amount of money you will have to pay as processing
fee when you borrow a lump sum amount. But you are wavered from any
processing fee or hidden cost when you go for gold loans. Since your
personal jewelry works as guarantee, the financial institutions do not
need any further documents. However, if you are taking loan against
jewelry from banks then you might be asked to pay some processing fee.
But such fees not required by private financers who give loans against
jewelry.
The same question of
security strikes a difference between gold loans and personal loans. The
absence of security makes the financial institutions ask you for
authentication of your proof of income and address proof. The process of
validation requires money. Eventually, the financial institutions ask
for processing fee. It can range up to 1% of the amount you have asked
for!
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