Things you should know before getting a gold loan

If you are strapped for cash and need some money urgently, one of the best options is to get a gold loan. Gold loans are easy to avail and you can use them for any purpose, from paying your bills or repaying your existing debts to even buying a new car or going on a vacation. As long as you are up to date with the current gold prices and keep track of gold rate in Goa or Nagpur, you can’t really go wrong with gold loans. Check out this page for more info.

However, if you are on the fence about taking a gold loan here is a quick guide to help you know its benefits

  • Gold Loan is a secured loan. The gold loan is taken against your gold ornaments as collateral. The amount of loan sanctioned is based on the value of your gold. It’s easy to get a gold loan and it also comes with a host of benefits such as:
  • Little Documentation: You don’t have to worry about submitting any income proof or having to provide any lengthy documentation. All you need to do is submit some id proof and address proof along with your photo, and you are done!
  • Low-Interest Rates: When compared to other loans, interest rates on gold loans are much lower.
  • It doesn’t matter if you have Bad Credit History: You don’t have to worry about your credit history, employment history, age or income level before applying for a Gold Loan.
  • Flexible Repayment Options: Gold Loans come with flexible repayment options and you can even repay the loan before its maturity date without incurring any extra charges.
  • No Prepayment Penalties: The best part about getting a Gold Loan is that there are no prepayment penalties when you repay the loan before the maturity date.
  • Most lenders allow you to borrow anywhere between 50% and 80% of the value of your gold. This value is determined by the purity of the metal and its weight.

Repayment

There are two ways in which you can repay the gold loan:

  • EMI (Equated Monthly Installments)  The EMI option requires a fixed payment each month for the entire tenure of the loan. In this option, a part of the payment goes towards paying off interest and the remaining part goes towards paying off the principal.
  • In Bullet payments, only interest needs to be paid during the tenure of the loan and the entire principal amount needs to be paid at once after completion of tenure. This option does not require monthly payments but does have higher interest rates as compared to EMI.

Before you pledge your gold jewellery or ornaments, consider the following tips to make the process easy and safe:

  • If you are purchasing gold jewellery or ornaments and jewellers give you a loan on it, keep in mind that jewellers will not offer high value on their own product. You can get more money for your gold by pledging it to banks or NBFCs (Non-Banking Financial Companies). To be smart about making these decisions always find out gold price today in bhimavaram or whichever city you live in and then match it with the interest rate you are expected to pay on your gold loan.
  • Don’t pledge the entire amount of your gold. Keep a portion of it to use in case of emergencies.
  • If you are planning to take a loan against gold, do not go for any frills like the insurance cover that come along with the loan. They just increase the cost for you.
  • Further, if there is no urgency for funds, try to avoid taking loans against gold as they are quite expensive compared to other loans. Banks and NBFCs charge an interest rate between 10% – and 24%. In comparison, personal loans are available at an interest rate ranging between 12-24% while home loans can be availed at 8-10%. The interest rates charged by NBFCs can be higher than banks because their credit appraisal criteria are usually not as stringent as those of banks

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