Manage your temporary cash crunch with gold loans: All you need to know

NBFCs charge higher interest rates than banks, but offer faster disbursement with minimum paperwork

Here are the pointers on how to manage your temporary cash crunch with gold loans:

• Gold loans can rescue you during a temporary cash crunch. Many banks and non-banking financial companies (NBFCs) claim that a borrower can walk out with cash within 30 minutes 

• Almost all forms of gold can be pledged, including jewellery and ornaments. A borrower can get maximum 75 per cent of the gold’s value as loan

• A gold loan offers flexible repayment option. You can either pay only interest in equated monthly instalments (EMIs) and principal at the end of the tenure (bullet repayment), or opt for a regular structure - where both interest and principal are charged monthly

• If you fail to pay by the due date, the lender may slap a 2-3 per cent annual penalty. If you skip more than three payments, it can sell your gold to recover its dues after a grace period of 90 days

• Watch out for charges other than processing fee and interest rate. Some lenders also charge 0.25 per cent for valuation and custodial charges