Factors To Consider Before Obtaining A Gold Loan

Since it's such a celebrated metal in India, it's present in almost every house here and every age group has it. Even when a child is bold, is gifted gold bangles or anklets. This makes gold loans the most popular loan product in India.

However, before applying for a gold loan, it's highly recommended to wait and compare the options and look at the below-mentioned points carefully and make an informed decision -

LTV of Gold Loan:

LTV stands for loan to value. It is that percentage of your gold's actual value, that is given to you as a Loan. Since we know that 100% of the value of gold is not given out as a loan, how much is to be given is decided by RBI in the case of banks. It is usually 75 per cent for banks and can go up to 90 per cent in the case of Non-Banking Financial Corporations. This means that if a bank gives you a 75,000 rupees loan against 1,00,000 worth of gold, a Non-Banking Financial Corporation can give you as much as 90,000 rupees as a loan. Consider the alternative that you believe is better for you.

Note: the scheme that gives the higher value for the same amount would mostly have a higher interest rate too.

Interest Rate:

The lowest Gold Loan Interest Rates are yet another factor that attracts people towards gold loans more than often. Gold loans have the lowest interest rates among all other loan products. The interest rates of banks are generally lower than the interest rates of Non-Banking Financial Corporations. Notice how NBFCs offer higher LTV ratios and then also charge extra interest to shield themselves from potential loss.

Gold Loan Tenure:

Gold loans are short term loans, therefore, before availing of a gold loan, You must check if you would be able to repay funds in a short period of time and also if the purpose for which you are availing a loan, doesn't require money for a long period. Usually, the gold loans are for a term of 12 months while in some cases it is also extended to 24 or 36 months.

Repayment Structure:

As we know the gold loan is a short term loan, and this means it would mature in a year or two (Three in rarest of rare cases). This also means that you would have to repay the entire amount early. Repayment is usually done in EMI's or Equated Monthly Instalments. These are fixed amounts that you repay on a fixed day, every month after the first month of amount dismissal till maturity for the repayment of your loan.

You have two alternatives to repay your loan:

Repay EMI's after the maturity which would include a part payment of your interest plus principal amount. Repay interest amount before maturity in equal instalments every month and repay the principal after maturity.

Note: Gold Loan does not have any prepared charges.

The credibility of Lender:

Many people have lost their gold by taking gold loans from fraudulent lenders. This has mostly happened when they see people offering both - higher LTV and lowest interest rate than any other Bank of NBFC.

Therefore, first, do a proper check if the bank or NBFC or jewellers are an established entity or not. Read about them over the interest. Talk to free consultation companies which don't charge you for giving financial advice. Search for Manappuram Gold loan near me, or SBI Gold Loans near me etc. to know which NBFCs and banks offer loan products in your area and check their LTV ratio, Interest rates etc.

Non- Payment:

The first advice to a person taking any type of loan must be to not take it if they feel they don't have the repaying capacity. If you default on a gold loan, the bank, NBFC or the jeweller will ask you a few times and send you the last notice to repay your loan. If still, you fail to do so, your gold would be sold to compensate for their loss.

Conclusion -

There are numerous fraudsters who are aiming to earn money by people's ignorance. Don't fall prey to such people by staying uneducated regarding the loan you are planning to avail.

Gold Loan: Now And Earlier

Nowadays, most things are done in the instalment system only to purchase most of the items. When there is a credit card that most people use to avail the benefits of the fast payment option in most counters also comes with the EMI system, including the interest and the principal in each month. The gold loan also comes with various types of repayment options for the repayment of the loan. Even if the purchase of the consumable and the durable goods, there are different options focused on the repayment options to pay very efficiently and comfortably and smoothly. These are done to have a good impact on the customer so that they remain sustainable as their customer and as well as they do for the existing customers so that they can get better options than the competitors.

The first and the best option is the repayment of the loan in the form of the EMI and paying the principal later. These are done for the customers who are having a little bit of problem paying the principal amount, and that is why the option of only paying for the interest in the form of the EMI that is equated to monthly instalment for the total number of months in the tenure period will need to be paid. It is considered that while replying only the interest, the person will have enough amount of time during which through The other means of working or arrangements the perfect person will be able to arrange the principal amount and will be able to give back during the time of the maturity of The loan amount will be paid at the last month of the nutrient that is on the maturity time. This kind of loan repayment option is available for products like electronics and other related products.

On the other side, if you look into the matter, partial payments are available. If there is an option by the loan provider to make the partial payments from the viewpoint of the gold loan interest rate and the principal amount, it will also reduce our massive pressure from the customer. Sometimes, in most cases, total prepayment before the tenure is allowed without penalty or charges. These are done mainly to better the people coming with the curiosity e off paying the interest at the exact period. Still, due to the pandemic situation, some relaxation has also been given to the customer to pay as per their situation and avail the benefit of the loan service for which the purpose of the loan will also be and fulfilled.

Before this modern era, sometimes some people must be thinking that if there is an availability of such a payment system where all the EMI and the principal amount or any down payment in overall total if is paid at the time of the enquiry of the loan period then it will be a huge boon. IIFL gold loans also have such options. Most of the loan providers in the market. One of the most significant advantages of this type of loan is that a person will not have to pay a single penny in all the tenure duration of the loan but at the last date of the loan expiry. This will save the person from being financially overwhelmed by too much word in if there is between the quarter of the months if there is any other kind of financial burden might be there which have become impossible for the person to run through to pay 2-3 expenses at a time. Between this timing, the person can have the arrangement or other kind of surplus made during this time can be added to the costs set aside for taking the loan will act as an extra benefit so that the loan is adequately painted at the right time.

Conclusion

Last but not least is the regular EMI option in which equated monthly instalment concept is involved where the total amount of interest and the total amount of principal before time in hand while starting the loan is calculated with the total number of months in the tenure period to find out the perfect and accurate EMI amount of each monthly instalments.

Apply online for a Gold Loan

Gold is one of those few metals that can help you to come out of your financial troubles. Through a gold loan, individuals can restructure their lives even from scratch and convert it into a fortune. Gold loan is a significant part of the financial market, and thus gold loan is one of the services which will be included in the portfolio of all the major banks and financial institutions.

With the advent of digitisation and the emergence of new technologies, applying for a gold loan is just a matter of 30 to 120 minutes. An individual can apply for a gold loan via both online and offline modes. The online way is promoted more by the banks and generally preferred by the customers in this pandemic situation. However, a person applying for a gold loan even through online mode has to visit the bank branch once to deposit the gold with the bank. Remaining all the formalities can be done online.

Gold loans offer certain advantages: low-interest rate than other loans, easy application, easy repayment, minimum documentation, and disbursement in a few hours.

One of the most significant advantages a gold loan offers is that there is no need for a good CIBIL score to apply for a gold loan. An individual with a bad CIBIL score can also avail of a gold loan. Gold loan, being a secured loan, does not create any pressure on the part of banks. If the customer defaults in repaying the amount, the bank can sell the gold in the open market and recover the money.

When a gold loan application is made, the lender gets the quality of gold checked, whether in-house or from somewhere else. And based on the quality inspection, an amount equivalent to around 80% of the value of gold so pledged is sanctioned. That is why the gold loan is considered a safe and secure way of financing.

Let's talk about some eligibility criteria which are needed to be filled by the customer applying for a gold loan-

• Only a resident of India can apply for a gold loan

• That resident has to be 18 years or above to avail of a gold loan

• A self-occupied house property has to be registered in the name of such individual applying for a gold loan

• Gold must be in the possession and ownership of such individual applying for a gold loan

• Only the gold ranging from 18 carats to 22 carats can be pledged as per the instructions of the RBI

Along with fulfilling the above eligibility conditions, a person applying for a gold loan also has to submit certain documents such as-

• Proof of your identity in the form of Pan card/ Aadhar card/ Voters id/ Driving license

• Proof of residence such as Utility bills of home/ Aadhar card/ Voters id

The interest and need of the middle class regarding gold loans have made the financial institutions offering such loans simplify the whole process. Almost all the major banks and financial institutions, including Allahabad bank, which gives Allahabad Bank Gold loan, have taken their services to their respective portals. A customer can quickly go to the portal and apply for a gold loan in seconds.

One more important detail regarding gold loans is that- Generally, the rate of per gram gold differs from carats to carats. ”Gold loan per gram” is the first question that comes into the mind of a person willing to avail of a gold loan. Gold loan per gram ranges from ₹ 2,573 to ₹ 3,145.

For 18 carats of gold, the rate offered will be around ₹2,611, while for 20 carats of gold, it will be around ₹ 2,901, and for 22-carat gold, the rates may go to ₹3,191.

However, these rates may differ from time to time and according to different market conditions.

One of the easiest ways of applying for a gold loan nowadays is through online mode. It saves the consuming time and energy of the borrowers and saves a considerable cost to banks, which enables the bank to offer the gold loan at a concessional rate to their customers.