What are exactly Gold Loans?
Firstly, many individuals might have consumed all kinds of gold ornaments and articles, which they barely used to dress up just for some special occasions or even lets say, hardly 4-5 times a year. These gold articles get them no much of a gain, just by ideally lying around all day long. So there comes the concept of Gold Loan. An individual can offer his/her gold to the lender in return for a loan for himself.And the interest must be paid, and it differs from bank to bank and from lender to lender. For example, in ICICI gold loan, the interest rate starts from just 10% onwards. When at the end of the final stage, the borrower can eventually repay and can take gold back again.
But all this might sound as convincing and good enough but ever thought of the risks being involved even in this schemes of getting yourself a loan sanctioned against your gold? Well, don’t worry we are here to tell you about the risks of gold loan and from there onwards you can decide and carefully step ahead without getting yourself into any kinds of troubles and risks.
Even though the central bank has granted permission at the time of worries or downfall, banks may still not lend you higher amounts of return against the gold you might be offering.
None can assure to revert your debt in any cases if the gold price has crashed down or if facing a downfall, and it’s purely the borrowers default.
One main factor which is of concern all the time is the surge of gold prices. That is nothing but, if there is unfortunately a certain decline in the gold price for a particular time, both the lender and eventually the borrower might be facing an effect, since lenders would face the situation of the collateral being less than its worth and which reflects the less loan.
As stated above lenders, just offer to 80%, even though it was permitted as 90% and this is because they feel that it would leave lenders with a very slight line at the margins especially at the time of gold prices in the markets facing volatility.
Even though, gold loans can be of a great help in fulfilling the various types of requirements of an individual especially in providing a financial stability, it is to be noted that there might be even higher risks revolving around the LVT.
Therefore keeping all these in notice, we prefer every borrower to step ahead accordingly and also we always make sure to remind the borrowers to calculate their every payment using a Gold loan emi calculator, if opted to pay using EMI’s cause this way, the total sum doesn’t go wrong anywhere.
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