Looking for a short-term loan? Check out this alternative

Gold loan is a scheme where a person can avail loan by pledging gold jewellery including gold coins sold by banks. The loan amount depends on the value of gold pledged.

Gold

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New Delhi: There is often a time in life when people need cash immediately. When such financial emergency comes, people prefer to take short-term loans. Sometimes credit card payments can work but in times when hard cash is required, short-term loans are preferred.

Some credit card companies and banks even offer loans against the credit limit on your card. However, the interest rate on repayment is very high which is why people tend to avoid that option. There are several other short-term loan options for when people need money immediately. Here is one alternative you can turn to.

Loan against Gold jewellery: The Gold loan is a scheme where a person can avail loan by pledging gold jewellery including gold coins sold by banks. The loan amount depends on the value of gold pledged. As per Reserve Bank of India (RBI) guidelines, up to 75 per cent of the value of the gold in the jewellery can be given as a loan. It is done after checking the purity of the metal and then ascertaining the market prices of gold.

It may be noted that gold loan is considered a secured form of loan for both lenders and borrowers. Fewer documents are needed for this loan and it is issued in just a few minutes. Also, there is no rigid schedule of EMIs since gold loans come with a bullet repayment plan. One can close the loan early without any pre-payment penalty.

It is a good alternative for a short-term loan because gold loan requires basic KYC documents like identity proof (passport, driving license, Aadhaar card, ration card etc) and address proof (electricity bill, telephone bill or other utility bills). Personal loan, on the other hand, required more detailed documentation involving identification proof, address proof, income proof, bank statement etc. Since the documentation is less in case of gold loans, they are disbursed very quickly.

Another great thing about gold loans is the fact that they are available online. An online gold loan account is one where the borrower deposits jewellery and gets online overdraft facility. The amount gets credited to bank account directly, and the borrower can repay as per their convenience.

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