9 things to consider before taking a gold loan
9 things to consider before taking a gold loan
Gold loans involve minimal documentation and get approved in no time, however, like every other loan, it is advisable to understand certain important factors before taking a gold loan.
For ages, investments in gold have been a saviour in times of financial distress or when in need of urgent cash. Gold jewellery can be utilised to meet unexpected medical expenses, build or repair a house, finance a dream wedding, or fund a child’s higher education. One can access the idle lying gold jewellery for Loans quickly and swiftly to meet pressing financial requirements. Moreover, anyone with gold jewellery can pledge it as collateral to get immediate funds when in need.
Gold loans have always been a popular borrowing option but have gained greater importance since the COVID-19 outbreak. It was easy for individuals to pledge their gold jewellery and overcome cash or funding constraints in uncertain times.
You get better terms and timely access to cash with gold loans than other traditional loan offerings. It is a convenient and secure way of funding without requiring individuals to liquidate long-term investments. IIFL Finance sanctions gold loans within 30 minutes with the proper KYC proofs and minimal documents.
However, like every other loan, it is advisable to understand certain important factors before taking a gold loan.
Gold Value & purity determines loan amount.
The loan amount sanctioned is dependent on the value of the gold. The valuation of gold is directly proportional to the purity of the gold. It is important to note that the purity of gold must be minimum of 18 carats to be eligible for a loan.
Different lenders use varying rates per gram upwards of 60% of the gold value to advance funds against gold loans. Make sure to verify the rate per gram to get the best deal against your jewellery.
Compare gold loan Interest rates.
A gold loan interest rate is determined by the lender’s risk assessment of the borrower. It may vary between 6-25 per cent per annum. LTV ratio (Loan-to-Value), loan amount, loan tenure and other factors used by lenders to determine the interest rate on gold loans.
Choose IIFL Finance gold loans and access the lowest interest on gold loans at 0.54% per month (6.84% p.a.)
Evaluate repayment options.
It is essential to check for flexibility in repayment options while taking a gold loan. You can choose regular EMI, bullet payments to settle gold loans. Select repayment options convenient to your income streams and cash flow position.
Choose IIFL Finance gold loans for multiple digital repayment options.
Choose a credible lending institution.
Choosing a credible and reliable lending institution is vital since it requires pledging gold investments as collateral. Avoid getting loans from unregulated lenders. Some might be fraudulent and impose unfavourable terms and conditions.
With 26+ years of extending financial services, IIFL Finance has strived towards keeping our loan offerings low-cost, simple, and accessible. We genuinely believe in the values of honesty and transparency and have always put the customer first. Seedhi Baat is a mantra we adopt in all our interactions and transactions to build trust and offer the best brand experience for every customer.
Most lenders do not charge for prepayment of gold loans. However, there is a possibility that the lending institution charges up to 2% of the principal amount as a penalty. Make sure to read the terms and conditions before taking the gold loan.
Processing fees are one-time expenses incurred by the lenders to process a gold loan application. It ranges between 0-2% of the loan amount. It is advisable to check the processing fee charges, especially in big-ticket loan amounts.
Loan disbursal time.
These loans involve minimal documentation and get approved in no time. It is essential to check that lending institution provides a quick disbursal of the gold loan and easy access to funds for business or personal needs.
Gold loans are short-term, involving repayment terms ranging from 7 days to 3 years. Choosing the loan tenure according to your monthly cash flows and other expenses is recommended.
Customer support mechanism.
While obtaining a gold loan, the borrower should choose a lending institution with a robust customer support system. Customer support is essential to resolve queries and settle dues seamlessly on a real-time basis. Additionally, lending institutions that send timely emails, SMS, WhatsApp reminders for interest and principal repayment help avoid penalties.
A gold loan empowers individuals to get through uncertain and challenging situations. It is an easy, quick, and convenient way to get funds for personal and business purposes.
Reach out to IIFL Finance to get an instant loan against your gold jewellery at competitive gold loan interest rate and live the life of your dreams without continuous financial stress.