Consider These 10 Things Before Applying For A Gold Loan
Availing a gold loan might seem very simple and easy at first. Here are the 10 things to know before you apply for gold loan.
Gold loans have become one of the most popular loan products for people looking to raise immediate capital. This is where they utilize their physical gold, which lays dormant in storage lockers. However, to ensure you choose the best gold loan product, you should keep a few things in mind.
Things To Consider Before Taking A Gold LoanHere are ten things to consider:
1. Rate Of Interest:The interest rate is the extra money you will have to pay to the lender over and above the principal amount. Hence, you need to find a loan with an ideal and affordable interest.
2. Repayment Options:The gold loan should come with multiple and flexible repayment options to ensure you can repay the gold loan at your convenience.
3. Tenure:The gold loan tenure determines the time limit to repay the loan and the EMI amount. Hence, choosing a suitable term is crucial.
4. Loan Amount:The loan amount should be adequate to ensure you have enough capital. Furthermore, as it also affects the interest rate, you should adjust the loan amount accordingly.
5. Lender Credibility:The success of the gold loan directly affects the goodwill and the lender’s credibility. Choose a lender with a good track record of furnishing successful gold loans.
6. Purity Of The Gold:The lender offers the gold loan amount based on the purity of the pledged gold articles. The higher the purity, the higher the gold loan amount.
7. Valuation Of The Gold:Lenders offer a percentage of the total value of the gold as the gold loan amount to the borrower. With a higher valuation of the gold, a borrower can raise a higher gold loan amount.
8. Approval And Disbursement Time:When you need funds urgently, a gold loan product must have a quick approval and disbursement time. Hence, evaluate the lender based on the time taken to approve and disburse the loan amount.
9. Additional Fee:Apart from the interest rate, lenders levy additional charges such as processing fees, valuation fees etc. You must analyze and compare lenders based on such fees and ensure there are no hidden charges.
10. Banks And NBFCs:Numerous banks and NBFCs provide multiple gold loan products. It is wise to compare them based on the above factors and choose an ideal financial entity and the gold loan product.
ConclusionGold loans are one of the most effective loans for people who own physical gold. However, you must consider the above-listed ten things before applying for a gold loan to ensure its success.
Q.1: Which is better for a gold loan- Bank or NBFC?
Ans: Both banks and NBFCs provide gold loans but have different processes and rates on which you should compare both entities. For example, unlike banks, NBFCs do not charge a processing or valuable fee.
Q.2: Does the rate of interest on gold loans keep changing?
Ans: Yes. The interest rate on gold loans may change every three to six months or a year.
Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.