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Tata Capital > Blog > Personal Use Loan > Benefits of Taking a Personal Loan for Buying Gold

Personal Use Loan

Benefits of Taking a Personal Loan for Buying Gold

Benefits of Taking a Personal Loan for Buying Gold

Buying gold is considered an auspicious occasion in our country, especially during the festive season. However, buying gold comes at a considerable expense. More so during festivals when the prices surge due to high demand.

Are you looking for a way to purchase gold without unduly draining your finances? The answer is personal loans. What makes taking a personal loan to buy gold a great idea? Read on further to find out.

1. Immediate Disbursal

The biggest benefit of taking a personal loan to buy gold is immediate disbursal.

Ideally, you want to buy gold when the prices are low. However, gold prices fluctuate rapidly in the short run. You’d like to purchase as fast as possible when you’ve identified the low cost you’re comfortable with, as delay can lead to a price hike again. A personal loan can help you raise the money required to purchase in the shortest time possible, as most personal loans are released instantly.

2. Ease of Use

Another benefit of a personal loan to buy gold is its associated ease of use. A home loan or a car loan can only be used for a specific purpose. However, there is no such restriction for a personal loan. You can use a personal loan for any purpose without having to justify it to the lender.

When you take a personal loan to buy gold but still have some amount left over due to a reduction in gold prices, you can use the money for other purposes. This can come in handy, especially during festival seasons, when you also have other expenses to take care of.

3. Fixed Interest Rate

A fixed interest rate is another benefit of taking a personal loan for buying gold. In India, most lenders provide personal loans at a fixed interest rate regardless of tenure. With a fixed interest rate comes a sense of certainty, and you are not at the whims of the market. Since the interest rate is fixed, you can more effectively plan financially for loan repayment. Contrast this with a floating interest rate loan, where you must constantly factor in rising or falling interest rates when planning.

4. Flexible Tenure

Tenure flexibility is another feature of personal loans that makes them perfect for buying gold. A flexible tenure will grant you much more financial freedom when purchasing gold. Typically, you can obtain a personal loan with a tenure of up to six years.

Since personal loans have a fixed interest rate, you can plan your loan tenure based on your financial situation. You can figure out monthly EMIs you will be comfortable paying before applying for the loan. For example, a longer tenure means a lower EMI, which will be less of a burden on your pocket every month if you have other expenses.

5. No Security Required

Usually, when you take a loan, the lender asks you to pledge something as security. For example, in a car loan, the car becomes the security or collateral. The security covers the lender’s money in case of a loan default.

This is where personal loans differ from other kinds of loans. The lender will give you a personal loan without security if you have a good credit score. The non-requirement of collateral makes the process of obtaining a personal loan to buy gold easier and hassle-free.

6. High Loan Amount

Purchasing gold requires a sizable upfront payment. Since a personal loan does not require collateral, you might think the loan amount will not be significant. However, you can obtain high loan amounts in personal loans, typically up to INR 35 Lakhs. The high loan amount offered in a personal loan is ideal for purchasing gold and other significant expenses.

7. Low Interest Rates

When you take a loan, the interest rate is one of the most critical factors. The interest rate decides the final amount you must pay back to the lender. If you have a good credit history, you can obtain low interest rates on a personal loan for gold purchase compared to a credit card. This is because financial institutions typically consider personal loans less risky than credit cards.

8. Improved Credit History

Another benefit of a personal loan for buying gold is an improved credit history. Your payment score improves when you take a personal loan and make timely payments. Payment score accounts for 35% of your credit score, which is a significant chunk. Hence, your credit score automatically improves when you make timely payments. However, be careful, as like a double-edged sword, missing payments can degrade your credit score.

9. Easy to Apply

Personal loans are much easier to apply for than other types of loans. To apply for a personal loan to buy gold, you need to:

  • Estimate the loan amount.
  • Determine your credit score.
  • Choose a lender after reviewing multiple options based on suitable rates.
  • Complete the application form, which in most cases can be done online.
  • When approved, accept the amount and start making monthly payments.

10. Easy to Manage

Apart from being easy to apply for, personal loans are also easier to track due to a lump-sum amount, fixed interest rates and monthly payments. With a personal loan, you can easily prepare and maintain a monthly budget since everything is fixed, especially compared to multiple credit cards with different interest rates, spending limits and payment dates.

Conclusion

Besides being an excellent investment, buying gold also holds a more profound significance, especially during the festival season. Taking a personal loan to purchase gold reduces your financial strain and provides many other benefits. If you’re looking for a reliable lender for a personal loan, look no further than Tata Capital.

Tata Capital provides convenient personal loans at attractive interest rates and flexible repayment tenure. What are you waiting for? Apply for personal loan with Tata Capital to obtain fast and hassle-free funding for your gold and other purchases.

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