What's the best way to get a gold loan?
The gold loan process for securing a loan differs from one lender to the other. The definition of a gold loan is straightforward: you pledge your gold items and receive the loan sum in return. To do so, take the gold you want to pledge and the necessary documents to a lending institution. The lender tests the purity of the gold and determines its weight before deciding its market value. Gold loan per gram of up to 90% of the calculated value of the pledged gold acquired. The records are checked after the value of the pledged gold is determined. Your lender will accept your loan until everything appears to be in order and promising.
Nowadays, you can apply for a gold loan through a bank's or NBFCs mobile application or official website. However, just because you apply for a gold loan online doesn't mean you won't have to see your lender in person. You must visit your lender at least once to deposit your gold articles to take advantage of the online gold loan. After that, you can register and connect your bank account to the lender's customer portal or mobile application. So, in the future, if you need money quickly, you can apply for a gold loan and have the available credit disbursed in your bank account in a matter of minutes, no matter where you are.
What kinds of people are qualifying for a gold loan?
To be eligible for a gold loan, you must meet the following requirements:
Working as a Salaried, Self-Employed Professional, Businessman, Farmer, or Trader, for example.
Age limit: To apply for a gold loan, your age must be between 21 and 60.
What kind of gold do you need to put down as a deposit?
The gold lending companies or financial institutions can only allow jewelry-grade gold. Coins/utensils or any other kind of gold are not allowed. Often, bear in mind that the higher the purity of gold, the higher the value and loan size. The gold’s purity should range between 18-22 carats or above. If the jewelry you're pledging contains gems or stones, they won't be valued; only the gold value is considered.
When it comes to gold loans, how long do they last?
The term of a gold loan is six months, and it is extended without charge for another six months. Since Yes Bank gold loan has such a short term, you must be sure to repay the loan on time. If you do not repay your pledged gold within the specified period, you risk losing it.
How much money should I borrow?
After determining the weight and purity of your gold, lenders determine the loan sum. They calculate the ‘Loan to Value Ratio,' also known as LTV. The majority of lenders offer loans worth up to 75%-775% of the market value of the pledged gold. Furthermore, the RBI has set a loan-to-value (LTV) ratio of 75 percent for gold loans and has guided all financial institutions and gold loan NBFCs to lend at this LTV ratio. E.g., if the value of your gold is Rs 1 lakh, the maximum loan sum a lender can give you is Rs 75,000.
What are the drawbacks to taking out a gold loan?
Loan-to-Value Ratio (LTV Ratio) – You get a percentage of the market value of the pledged gold as the loan sum of a gold loan. The LTV (Loan to Value) ratio is used to determine the loan size. This ratio varies from lender to lender and can be as high as 80% of the value of the pledged gold.
You will lose your gold if you default on a loan – If you default on a gold loan, your creditors have the legal right to seize your properties and sell them at auction to recoup the unpaid debt.
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