All You Need To Know About Gold Loan Fees And Charges

If you require money in an emergency, look no further than that gold jewellery or those few coins lying idle at your home or in your bank locker. They can bail you out of the sticky situation.

A gold loan is a really easy way to help pay off an unforeseen medical bill or your kid’s school fees or for urgent repairs to your home or shop.

In fact, getting a gold loan is a hassle-free and convenient way to secure some cash quickly. Most lenders now offer a fast online process that the borrower can complete from the comfort of their own home.

But everything comes at a price, and a borrower has to incur some nominal charges to get a gold loan. These charges pay for the cost of capital as well as for all the customer service support and some value-added services.

So, what are the charges that a borrower has to incur while taking out a gold loan?

Interest:

This is the most important cost that a borrower has to pay while taking on a gold loan.

A borrower must look for the most competitive interest rate being offered in the market.

Most lenders typically levy an interest rate of anywhere between 12% - 27% per annum on gold loans. The interest rate varies according to the purity of the gold and the tenor of the loan. The better the purity of the gold, the lower the interest rate.

Processing Fee:

The best part about most gold loan schemes is that the processing fee can be zero for small loans of short duration as long as the purity of the gold pledged is good. Even for bigger amounts, the fee is minimal.

Valuation Fee:

Many lenders charge a flat nominal fee for valuing the gold that is to be pledged as collateral.

Foreclosure Charges:

Some lenders may impose a small foreclosure charge if the loan is closed before the stipulated period of a few months. This fee is essentially to make up for the loss of interest the lenders have to face when a loan is closed in advance. Most lenders don’t levy any foreclosure charges for small amounts. They also don’t impose any foreclosure charge after the stipulated period.

Except the foreclosure charge, all the non-interest charges are levied at the time of the disbursement of the loan.

Conclusion

A gold loan is a convenient way of borrowing money that you may need. Moreover, you can apply for a gold loan online from the comfort of your home and do not even have to visit the lender’s branch.

In addition, a gold loan is a much cheaper alternative to other forms of short-term borrowing like a personal loan or credit card debt. The non-interest charges are either zero or bare minimum, effectively keeping the cost of borrowing against gold quite low.