Gold loan, as the name suggests, it is a loan against Gold. Owning gold is an excellent way to diversify your portfolio into tangible assets without any hassle with the management. Privately vaulted gold and overseas real estate are the only non-reported assets that a US citizen can hold.
Gold works as a security for getting a required amount of finance from the bank. One of the most attractive parts of gold loans is, you can get funds up to 80% against the value of gold.
When you want a gold loan, you need to take your gold assets to the lender. Based on the purity of the gold, you will be granted a loan. Gold loans are very easy to get and you can get it processed in just 30 minutes with minimal paperwork.
Gold As An Investment
Gold is one of the best precious metal that is often regarded as a safe haven asset. In the olden days, gold was used as a form of currency like most assets and it fluctuates based on supply and demand. Although it is a reliable investment, some consider it as a poor investment since it doesn’t bring any earnings. However, over time, it not only retains its prices rather increase in value as well.
How Gold Loan Program Works?
Financial corporations, banks, and the non-banking sector buy gold, silver and platinum jewelry. Most of these services offer pawning services on your hard assets. They are very instantaneous without any credits. This is how it works
- You will be required to take your gold assets to the lender where one of their trained professional check for the purity of the gold.
- They will determine the value of the gold based on the market price, weight, and purity.
- Based on this analysis, they can tell you the maximum loan value.
You can decide how much money you want to borrow depending on your requirements.
How Can You Take Part In Gold Loan Program?
When you want to take part in the gold loan program and make yourself eligible, you should have a minimum holding of at least $100,000 USD. Moreover, when you want to be a part of this program, you should either be a client or an account holder of that specific bank. Nevertheless, when you don’t hold an account with that bank, you can open it right away. This makes it easy to purchase gold and borrow against its value and investment in a number of domestic and offshore investments. Gold loan programs are also available to non-US citizens in many of the banks.
Why Should You Take The Loan Instead Of Selling?
If you own gold in the form of jewelry, it is advisable to get gold loans. When you sell the jewelry, you will be paid only for the gold it contains after wastage. This is a substantial piece of money, you are going to lose, so selling the jewelry is not often considered as a better option. In addition, the interest rates are lower when the loan amount is not more than 50 percent of the total value of the gold pledged. So, taking a gold loan is always preferable to selling your jewelry.
Are There Any Risks Associated With The Gold Loan Program?
There is not much risk involved in the program because the gold is safely stored in the secure Swiss vault. As a result, the borrowers will need to bear only fewer fees and costs to obtain significant funds from the bank. Also, the annual interest rates are very nominal for the amount of stored gold if you borrow more than 75% of funds. However, when your loan amount is less than 50% of the gold’s market value, then your storage costs are completely free. You can even sell your gold after a year but still, the fees will be waived.
To Sum It Up
There are few things that you have to keep in mind before deciding on a gold loan such as the quality of the lender and the quality of the gold. Always go with the reputable lender who suits your individual requirements and use your gold as collateral to secure loans.