In India, gold loans are quite popular, as gold here is considered a traditional store of value and is often passed down from generation to generation. When it comes to gold loans and credit scores, it is essential to remember that a good credit score is built with time. It requires responsible credit behaviour, not just a single loan.
A gold loan app offers such facility with just a few taps on your smartphone. Long gone are the days when people actually used to visit banks in order to avail the same.
Such loan types offer a quick and immediate source of funds for emergency situations, as it is disbursed within a few hours of applying.
What is a gold loan?
It is a type of secured loan where borrowers pledge their gold ornaments or coins as collateral to the lender in exchange for funds. To avail this facility, the potential borrower must typically visit a lender, such as a financial institution/bank, and submit their gold items for appraisal.
Further, the lender will then determine the value of the gold based on its purity and weight and offer the amount of the loan based on a percentage of that value.
If the borrower accepts the offer, they’ll be required to sign a loan agreement and provide the lender with the gold as collateral. Then, the lender will hold onto the gold for the duration of the loan and return it to the borrower once the loan is repaid in full.
(Tip: Use a gold loan interest calculator before availing the loan.)
How gold loans helps in increasing credit score?
This potentially helps improve the credit score of the borrower. However, the prime condition here is that the borrower should be able to manage the loan responsibly and makes timely repayments.
So, when a borrower takes out the loan, the lender reports the loan to credit bureaus. The credit bureaus further use this information in order to calculate the credit score of the borrower, which is a measure of their creditworthiness.
If the borrower makes their payments timely and whole, this can positively impact their credit score. This shows that the borrower is responsible with credit and can be trusted to repay loans in full and on time.
However, on the other hand, if the borrower by chance defaults on the loan or misses payments, this can have a negative impact on their score. This indicates that the borrower is unreliable regarding credit, which can make it more difficult for them to obtain credit in the future.
How to avail this loan?
Around two months ago, I was planning to avail the same in order to complete renovation at my residence. But, did you know you can easily avail such a facility while sitting at your home in your comfort zone only? Just download the right application, like Bajaj Finserv, and you are more than good to go.
Now, I’m not promoting any organization here but sharing my personal experience, which was relatively smooth and fast. Moreover, this application also offers a gold loan calculator, which helps in planning your finances in a much better manner.
- Download the Bajaj Finserv app
- Sign up with your mobile number
- Tap on Gold Loans under the ‘Products for you’ section
- Proceed further