Financial Literacy & Gold Loans: How Chola is Educating Customers

Understanding Gold Loans

Gold loans are a type of secured loans where you use your gold as a collateral to avail funds. Once availed the funds can be used for anything- emergency expenses, healthcare, education etc. The interest rates for gold loans are generally very low due to the existence of a collateral.

You will be able to obtain the money you need without actually losing your gold. People hold a lot of emotional value over gold and the fact that you don’t have to lose it to avail funds only adds on to its appeal.

A gold loan is available to any Indian citizen who is at least eighteen years old and under eighty-five. Applying for it requires very little paperwork. Simple identification and proof of address are sufficient. The borrower must bring their gold to the lender after completing the application, which can be done online or offline. After evaluating the gold you provide, the bank calculates the maximum loan amount you qualify for, which may be as much as 75% of the gold's worth. The amount is then quickly disbursed to your bank account and can be repaid in easy instalments.

Why Does Financial Literacy Matter

Financial literacy means knowing having a good idea about managing your money. This also includes understanding how to borrow wisely so as to avoid financial problems. Being financially literate is very important before applying for a loan.

Being smart with money matters will help you take informed decisions. If you are financially informed you will know how to compare loan offers, evaluate interest rates, compare banks and NBFC etc. A person who is money wise ends up getting better financing than a person who is not.

This also helps with repayment and further borrowing. Being financially literate means, you know how to budget your daily expenses to make sure you make your payments on time and also know when to borrow and when not to borrow. Financial literacy gives you the power to build your credit worthiness.

When it comes to gold loans, understanding your finances will help you pledge the right amount of gold to borrow only whatever is needed and to avoid overborrowing. People end up making mistakes due to lack of knowledge on financial matters

Common Mistakes in Gold Loans Due to Lack of Awareness

The lack of financial literacy often leads to borrowers making mistakes. These mistakes can cost them money and sometimes even their gold. People who are not very well versed on money matters tend to overborrow without a clear plan. They pledge more gold than needed without a proper repayment strategy. This can result in struggling with repayments and defaulting which will only increase their financial burden.

People also tend to overlook interest rates. They end up focusing only on the loan amount and not on anything else. This can result in them having to pay way more than they expected to. One must do their research before getting a loan. The interest rates, terms and conditions should all be looked into. Better options are almost always available. Being sure about the lender’s credibility is also really important.

Conclusion

Gold loans and financial literacy go hand in hand. Without financial literacy borrowers are at a risk of overborrowing, not understanding terms and maybe even losing their gold. By understanding how gold loan works you will be able to make smarter decisions.

Financial literacy is not just about knowing how to manage your money but also about having the confidence to make informed decisions. With proper knowledge you’ll come to realise that gold loans can be a very safe and effective tool when used wisely.