With many options being available for the borrowing individuals and entities, certain factors have to be considered while selecting a particular credit facility. These factors can be the interest rate charged, terms and conditions, repayment schedule, and the tenure of the loan facility. A gold loan is the most comfortable and feasible credit facility that can be easily accessed by the borrowing individual or entity.
The gold loan or the loan against gold is granted by the financial institutions against the yellow metal. The individual or entity pledges the object. The funds are disbursed within 45 minutes of application and approval. The documents required are very primary, and the application asks for the necessary details of the borrowers. Besides that, the lending institution (banks and non-banking financial companies) have to go through the collateral presented by the borrowing individual or entity. After the amount gets credited to the borrowing individual or entity’s account, the repayment procedure starts. The lending organisations offer few options to the borrower so that they can opt for a method as per their ease of payment and their repayment capacity.
The most commonly used method would be the Equated Monthly Installment (EMI) method. This is a method where the borrowing individual or entity has to pay a small portion of the total loan amount, including the principal amount and the interest charged monthly at a specified date. The Equated Monthly Installment is calculated using the loan amount, interest rate and tenure of the credit facility. Longer tenure will reduce the monthly amount, and shorter tenure means a higher amount to be paid every month. Nowadays the financial institutions (banks and non-banking financial companies) have introduced a tool named Gold Loan Calculator which can be used to estimate the monthly obligation based on the distinct credit amount and interest rate of the borrowing individual or entity. Using the calculator will help the borrowers to get a loan of the amount that will suit their budget and can sort their financial issues as well.
These advances are taken to smoothen over the cash crunches faced to cover up for the shortfalls faced by the borrowers. Still, there are chances that due to precise personal reasons, the individual or entity is not able to keep up with the payment of the credit amount. If in case the borrower has missed just one payment, then no damage will be caused as the borrowing individual or entity can always pay the late payment fee and clear the dues. If more than three consecutive payments are not made, then the institution will take action against the borrowed individual or entity.
In case more than three payments have been missed by the borrower, the lending institution will give a notice period of sixty days to the borrower and then take any action of auctioning off the collateral. The auction of collateral is the worst-case scenario, and before that happens; the borrowing individual or entity can inform the lender about their problems. They can request to renegotiate the terms and conditions of the gold loan, which is also known as restructuring the loan. Union Bank of India Gold Loan policy has the option of restructuring available for the borrowers. Where there is a will, there is always a way. Missing out on one payment will not be a matter of concern. The individual or entity should be aware and observe if there are any possibilities that they might not be able to keep up with the payments; they can communicate and resolve the issues with the help of the lending institution.
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