Gold prices have always been skyrocketing, but now people have decided to use these soaring prices to their advantage. Gold loans prevent people from getting rid of that squeezed household income and medical or financial emergencies. People are now looking for an economical and profitable way to get credit. Gold loans are, in turn, the best way to get a credit against the physical gold.
Different types of loans come up with various charges; these charges differ according to the policies levied by different banks and NBFCs (Non-Banking Financial Companies). So, getting a loan could be easy, but the costs attached to it might not always be under the financial capacity of a person. That is when an economical and an easy to get a loan is required. That is when gold loans act as the saving grace.
Gold loans are incredibly convenient to apply. You can now apply for a gold loan comfortably by sitting at your home online or by visiting your bank with the gold articles to avail the gold loan amount according to the bank's gold loan per gram. But, it is better to be aware and informed before making the move to prevent any debt traps later. Hence, here are the 5 tips to consider before applying for a gold loan.
1.Checking creditor's capability - It is extremely important to check the credibility of the lender. The borrower's credibility is duly checked before lending him/her the loan amount. But what if the creditor turns out to be a fraud? Thus people should always apply for a loan from Banks or NBFCs.
2. Compare your options - Doing prior homework before applying for a gold loan is important and turns out beneficial in the long run. Compare the loan amount provided by different Banks and NBFCs by their interest rates and gold loan per gram. For instance,The ICICI gold loan interest rate starts from 9.90% to 17.90%.
3. Prior knowledge of quality and quantity of gold accepted - It is very important to research and understand what is the minimum amount and the quality at which the bank provides loan. Creditors provide loans on gold which ranges between 18-22 Carat or above in purity.
4. Consider the repayment structure - The borrower should understand and research the repayment of the amount. This will help in applying for the loan amount accordingly with no risk of debt trap. In some cases, there is EMI repayment, which includes both interest and principal amount.
5. Consider LTV calculation - LTV stands for loan-to-value ratio. This is used by the lenders to express the ratio of a loan to the total worth of an asset. Thus, to get maximum results, it is better to consider and gain complete knowledge about the LTV ratio.
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