GoldLoans have become increasingly popular in India. This is mainly because of the
flexibility they offer and the ease of obtaining them. They are Secured Loan
that uses gold as collateral.
Nowadays,an onlineGold Loan is offered by various financial institutions. It isusually a quick and easy way to get funds. However, before you think of taking
one, there are several things you need to remember. The following are some:
· Value of gold
Thevalue of your gold is the most important factor in determining the amount of
money you can borrow. Financial institutions that offer Gold Loans determine
the value of your gold based on its weight and purity. Therefore, you should be
aware of the current market value of gold, as this will help you negotiate the
best terms and conditions for your Gold Loan.
Also,be sure to assess the weight and purity of your gold. This will impact the
amount of Loan against Gold you can receive.
· Interest rates
GoldLoans' interest rates are generally lower than Unsecured Loans. However, there
may be a significant variation in interest rates offered by different financial
institutions. So, compare the interest rates offered by different lenders
before deciding on a Loan. Some lenders may also offer special Loan againstGold interest rates or discounts for certain customers, so it is importantto keep an eye out for these.
· Processing Fees and Other Charges
Thereare several charges associated with a Gold Loan. These include processing fees,
pre-payment charges, and late payment fees. Processing fees can range from
0.25% to 1% of the Loan amount. Pre-payment charges are levied when you repay
the Loan before the due date, and late payment fees are charged when you miss a
payment. Check these charges beforehand like you would when you applyfor Personal Loan.
· Repayment Options
GoldLoans typically have a tenure of up to 12 months, with some lenders offering
longer repayment periods. Hence, you should review the repayment options
offered by the lender before taking the loan. Some lenders may offer flexible
repayment options, while others may not. You should also check if there are any
penalties for pre-payment or early repayment of the Loan. You can check the
same on your lender’s Banking app.
· Loan-to-Value Ratio
TheLoan-to-Value ratio refers to the amount of money a lender is willing to lend
against the value of your gold. The LTV can vary from lender to lender.
Therefore, check this before taking the Loan. The higher the LTV, the more
money you can borrow against your gold. However, a high LTV also means that the
interest rates and other charges may be higher. It is a good idea to go over
this aspect once before taking the Loan. If you have any queries, reach out to
your lender.
