Things to Keep in Mind Before Taking a Gold Loan
There is no doubt about the fact that a gold loan can help you in times of need. Offered by several banks and financial institutions, a gold loan can be obtained by anyone with a certain unemployed gold living in their own homes. You just have to send it to the lender to get the loan amount at an affordable price. This feature alone makes gold loans one of the best and easiest ways to borrow today. And because of the secure nature of the gold loan, it brings some debt mix to your profile.
But as it sounds simple, there are some things that most people forget when applying for a gold loan. In this article, we can tell you about the things to keep in mind before choosing the best credit provider to choose a gold loan. If you need a financial need and want to choose a gold loan, these things will guide you to choose the best lender according to your needs.
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As we have told you, to get a gold loan, you need to include your gold as collateral or security for the lender. The lender will return your gold ornaments and gold coins after the loan is repaid. Some lenders also lend your gold in advance of a prepaid loan in the event of an emergency. But have you ever thought about a situation where a creditor is fraudulent, and even if he has paid the full amount, you will not get your gold?
Of course, to avoid such situations, you should check the credibility of the lender. Remember to choose your lender as a private or private bank or Non-Banking Financial Companies (NBFCs) so that your gold remains safe for them. Research regularly about the lender you want to get a loan from. Factors such as the customer reviews of the credit facility provided by them, their safety measures for your gold and other items should be considered.
This is one of the most important factors to consider when applying for a gold loan. Several lenders offer gold loans, but the number of gold loans varies from bank to bank. Note that no lender offers 100% of your gold value as a loan amount. It is usually between 65% to 85% – 90% of the total gold price.
So, for example, your total amount of gold is INR 10 lakh, you can get a higher loan amount of INR 9 lakh from any of the lenders. It is, therefore, important to consider the characteristics of the right lender so that you can make the best decision while choosing the highest loan-to-value (LTV) rating for your gold loan structure.
It is very important in determining the amount of money you pay because of the direct effect you have. Therefore, always choose a lender with low-interest rates so that you do not have a high repayment rate. Different lenders offer gold loans at different interest rates, which is why it is important to choose a lender who can give you low-interest rates while filling out your other needs.
This is a major factor that many people often overlook when applying for a gold loan. Compared to other loans, gold loans offer better flexible payment methods to customers. Therefore, check the payment methods offered by your lender on your gold loan. Some lenders allow you to pay interest in advance and pay the principal amount at the end of the term, while others allow you to pay the interest rate monthly, quarterly, annually, or annually and pay the principal amount at the end of the position. You can also choose the EMI payment method to pay your share of both the principal amount and interest monthly. In addition to all these options, some lenders also offer a Bullet Repayment system where you have to pay the principal interest and interest at the end of the term of office.
Therefore, it is important to consider what type of payment method you want to choose while choosing the right lender.
Generally, the gold loan period is short – ranging from 12 to 48 months. Therefore, you must check your repayment balance before choosing a gold loan from any lender. Because any losses will affect your credit score, and you may have to pay additional costs as well. So, keep this in mind when choosing a rental and payment method for your gold loan location.
So, these are some things to know when choosing a lender. Gold loans are easy but choose when you are faced with a temporary cash-flow problem. Do not use them to pay for large expenses, such as buying a house. Keep as short a time as possible. Moreover, always compare other banks gold loan rate before investing.applying for a gold loan