Thus we have analyzed and listed below 5 major mistakes committed by people while applying for a gold loan:
A major mistake that is often made by people who are new to the concept and scheme of gold loans is that they do not check for the lender’s credibility. While taking financial help from the scheme of gold loan you must have your own research grounds so as to assure and verify the credibility of the lender from whom you are availing the gold loan. When this is not done then there comes a risk of things going wrong and your gold assets might be risked as well. Thus it is necessary to ensure complete safety before you are going to trust another person or organization with your essentials. Make it a note to choose a well-reputed financial institution like banks or NBFCs. You can choose an HDFC gold loan for the best services and low-interest rates.
Comparison is the key when it comes to any type of loan. In the case of gold loans, various financial organizations tend to offer the scheme of gold loans under various benefits. There are many banks (HDFC Bank, Canara Bank, PNB Bank) and non-banking financial companies like Muthoot Finance Ltd. and Manappuram Finance Ltd. All of these institutions have different offers available for you where they have different interest rates, different processing fees, different loan to value ratio (LTV), and other charges. Moreover, some institutions can provide better service and have been there in the field of finance for a long time. Thus you should choose your institution on the basis of your convenience and also keeping in mind the credibility of the lenders.
Another important thing to consider while applying for a gold loan is the repayment structure and facilities provided by the particular institution/s. It is essential on your part when it comes to repaying credit, that you should be able to avail of the tenure option and method of payment. While most reputed banks and NBFCs take care of this situation, some new financial institutions might not care about these things. Moreover, it is also your responsibility to make it clear regarding your repayment convenience to the lender if you want to avail of regular EMIs, bullet payments, or interest-only payments.
As we keep on digging deeper we get to know more details which are very necessary to acknowledge. The loan to value ratio is a basic detail that needs to be focused on before getting one’s gold loan gets approved. Banks and NBFCs generally grant a loan on 70% to 75% of the loan to ratio value, but as RBI has declared, the LTV value has increased to 90% now, due to the pandemic circumstances. For example, if you approach 5 lakh, considering you have a jewelry asset of around 5 lakh, then now you should be getting a credit close to 4.5 lakh. As you do not get the exact market value of the gold, you will tend to get less, but you should make sure to choose the institution that is providing the highest loan to value ratio.
Lastly, as you are going to opt for a gold loan then you should know more about gold purity and gold rates. It is essential to remember that gold loans are accepted for having gold purity of 22 karat and above. The more pure the gold quality is the greater amount of credit is accepted by the lenders. Further, they will also calculate your loan amount based on the recent market price.These are a few listed things that should be kept in mind while choosing a particular institution to mortgage your assets.
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