Gold loan is defined as a category that assures security to both lender and borrower. Today the price of gold is on the extreme rise and therefore considering purchasing gold today can help you to grow in the future because the yellow metal never depreciates.
Gold Loan, Liquid Gold Loan, and Bullet Repayment Gold Loan are the three forms of gold loans offered by the lender. Gold Loan and Liquid Gold Loan repayment terms are up to 36 months, while Bullet Gold Loan repayment terms are up to 18 months.
Take out a gold loan from an Indian bank with interest rates ranging from 7.5 percent to 29 percent per year. Depending on the loan scheme you want, you can get a loan for up to Rs.1.5 crore with a repayment period ranging from 3 months to 3 years. In the case of a financial emergency, you will pledge your gold ornaments and jewelry for donations.
Features of Gold Loan
Purpose: You can get a gold loan in situations such as education purpose, wedding preparations, medical purposes, etc.
Protection: The gold that has been pledged with the bank or financial institution serves as security or collateral for the loan sum.
Tenure options: Tenure options will vary from three months to 36 months.
Fees: Other fees that can apply to a gold loan include processing fees, late payment charges/penalties for not paying interest, valuation fees, and so on.
Repayment Options: Borrowers have three key choices for repaying a gold loan, according to lenders. Repayment in Equated Monthly Installments is one of them (EMI) Interest is paid upfront, and the principal loan balance is repaid at the end of the loan term. Interest is charged every month, and the principal loan balance is repaid at the end of the loan period.
Rebates: Several lenders can give a discount on the current interest rate on a gold loan if the borrower repays the interest on time. This rebate will range from 1% to 2% of the original rate of interest.
Things required to consider while taking a gold loan
Things you need to consider a gold loan? Here are some certain points that will help you to identify whether to take a gold loan or not?
Loan Amount: When you apply for a gold loan, the loan amount will be determined by the value of the gold you pledge. Lending from PNB Gold Loan may have set a minimum and maximum loan amount as well. If you need a specific loan sum, make sure you have the necessary gold and that it falls within the lender's guidelines.
Rate of Interest: As compared to an unsecured loan, a gold loan has a lower interest rate since the borrower must have collateral. However, interest rates paid by different lenders can vary, so it is in your best interest to compare interest rates charged by various lenders.
Applicable charges: Lenders can charge a processing fee, paperwork fee, appraiser fee, payment default fee, loan overdue fee, and other fees in addition to the interest rate. These fees, when added together, will raise the loan's overall cost. As a consequence, before applying for a gold loan, make sure you consider the fees paid by the lender.
Tenure of the Loan: The repayment period for gold loans can be anywhere from three to 36 months. As a result, you should ensure that you understand your repayment potential and select a gold loan with a reasonable loan tenure.
Conclusion: The Gold Loan Process contains several points that are required to be understood before time. Though it is an easy process, still risking your precious ornament can also give you some trouble if taking a loan is unnecessary. It is important to realize that your ownership of your gold loan is also at risk if you do not repay the amount on time.
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