There is no uncertainty about the way that a Gold Loan can act as the hero on the occasions when you need urgent funds. Given by several banks and financial institutions, a gold loan can be profited by any individual who has some idle gold sitting in their homes. People can get the loan amount at an affordable rate of interest against submitting the gold to the lender. This makes a gold loan the easiest and the best loan option today. Be that as it may, as simple as it sounds, there are a few things many individuals neglect while applying for a gold loan.
If you are someone who is confronting a dire requirement for funds and hoping to choose a gold loan, some factors must be kept in mind before selecting the best lender suitable to your requirements.
Major important factors are as follows-
THE CREDIBILITY OF THE LENDER :
An individual needs to present the gold as insurance or security to the loan lender. The bank will return the gold ornaments and gold coins after the reimbursement of the loan. A few banks likewise discharge the gold on part repayment of the loan in the event of any crisis. Yet, has anyone at any point thought about a circumstance where the moneylender is a cheat, and surprisingly, after making the full reimbursement, one would not get the gold back?
All things considered, to stay away from such circumstances, an individual should check the credibility of the moneylender from which he/she is deciding on a gold loan. Make sure to pick the loan specialist as a presumed public or private bank or Non-Banking Financial Companies (NBFCs) so the gold remains safe and protected with them
LOAN AMOUNT :
This is perhaps the main variable to take a gander at while applying for a gold loan. A few moneylenders give gold credits however the gold advance sums contrast starting with one bank then onto the next. Know this thing that no moneylender gives 100% of the gold worth as the credit sum. It as a rule goes from 65% to a limit of 85% – 90% of the general gold worth.
For example, if your gold’s net value is INR 10 Lakh, you can get a maximum loan of INR 9 Lakh. So, it is essential to check the specifications of each lender so that you can make a better decision while finalizing the highest Loan-to-value (LTV) ratio.
RATE OF INTEREST :
It is the most vital factor in choosing the repayment sum as a result of the immediate impact it has. In this way, consistently pick a loan lender with the most reduced interest rates so that the customer doesn't have a higher repayment sum. Different institutions can provide different rates of interest. For example, the Canara Bank gold loan provides a maximum of INR 20 lakh gold loan interest rate at 7.65%.
REPAYMENT METHODS :
This is an important factor that people tend to oversee while applying for a gold loan. When compared with different loans, gold loans give pretty adaptable repayment strategies to clients. Thus, one should check the repayment strategies that the bank is giving on the gold loans. Some institutions let people pay the interest amounts at the time of loan application and allow to pay just the principal amount at the end of the tenure, while some let the borrowers repay the interest amount in installments during the tenure and then pay the principal amount at the end of the tenure. So, it is essential to check the type of repayment method that the selected lender is giving an option for.
REPAYMENT TENURE :
For the most part, the repayment tenure of the gold loan is short– going from 12 to 48 months. Along these lines, it is essential to check the reimbursement limit before choosing a gold loan plan from any moneylender. Since any missing installment will affect the credit score and the customer may need to pay some additional charges as well. So, remember this thing while at the same time picking the tenure and the repayment method for the chosen lender.
CONCLUSION :
So above are the important factors to keep in mind while applying for a gold loan with any of the chosen lenders. Also, it is essential to keep in mind, the documents required for a gold loan are 1. Two passport-size photographs, 2. Identity proof such as PAN card, Aadhar Card, or Voter ID Card, 3. Address Proof ( Electric Bill/ Gas Bill/ Telephone Bill).
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