Gold Loan, what is usually referred to as loan against gold, is a much-secured loan taken by the borrower, by pledging their gold articles like gold jewellery or gold coins which can range from within 18 to 24 carats as collateral, from a lender. The loan amount which is provided is a certain percentage of the gold, that is typically up to 80%, based on the current market value and including the quality of the gold. Gold is also popular since people find it easy to achieve and it can be liquefied easily.
In countries like India, people usually opt for a gold loan over the personal loan for its several beneficial features such as there are low interest rates (Gold Loan Interest Rate) and many other aspects. But, before pulling up a gold loan, in India, one should definitely know about the precautions needed. Here are some measures relating to the same.
Value of the gold:
Before going for the gold loan one must surely calculate the value of their gold in the present market, according to the current value of gold. One must not forget that they will get sixty per cent to seventy per cent depending upon the purity of their gold.
Loan Amount:
As already mentioned in the above point that the amount of loan depends on the present market value of the gold. The way how the lender is evaluating the amount of your gold can be differentiated from the highest amount that you can get. Some lenders calculate the value of the gold in the previous fortnight and take the average price for figuring out the price in step with gram of gold (Gold Loan Per Gram) ; at the same time as a few take the day by day price for valuing your gold. One must obviously consider which lender is giving higher value of your gold.
Interest Rate:
It is short sure that on any given day that the interest rate of a gold loan is less than a personal loan. But getting a good amount of knowledge and doing research can even bring the low interest rate on a gold loan. For taking a gold loan one has two options available, it can be either a bank or NBFC.
The credibility of the Lender:
While taking a gold loan one keeps their gold with the lender as a collateral. Therefore, it is a matter of concern that the gold be in safe hands. Almost every gold loan does not need much paperwork.The danger issue for the financial institution turns into very much less as your gold is with the financial institution and they could liquefy it in case you default to pay off the loan.
Purpose and Tenure of the Loan:
It is not false that a gold loan is much cheaper than many other loans and is available within a few hours easily. But it is advised that one should not take a loan for risky purposes. Also, the tenure of a gold loan is shorter. It is generally ranging from 6 months to 48 months.
Other associated charges:
As in other loans, a gold loan also comes with some additional charges such as processing fee, documentation fee etc. One must surely be aware of those kinds of charges that are associated with the disbursement of the loan. There are also penalties which can be imposed upon you during the tenure of the loan.
These are a few precautionary measures that one must consider while getting a gold loan.
Comments