Gold loans have been a part of India’s economy for centuries. It is used as an alternative to personal loans during emergencies. By pledging gold, anyone can secure quick cash and make repayments later. The interest rate for such loans is lower compared to various unsecured loans.
Before applying for gold finance, make sure that you can repay the amount in full within the given tenure. Gold loan is secured in nature as you pledge your gold to the lender. But still, gold finance comes with risks, so make sure to know some essential things listed below.
1. Lender’s authenticity
Always visit a credible lender to apply for a gold loan. Make sure to read your lender’s terms and conditions before signing an agreement. Get the best quote for your gold by getting its quality check done right in front of you. Don’t let your gold go out of your sight for quality checks.
2. Amount required
Gold loans can help you generate a reasonable amount when you need it. However, you won’t get a 100% loan on the current market value of the gold. Mostly, it ranges between 60%-75% of the gold value. The amount credited by the lender depends on gold purity, current market value and gold finance policy of the lender.
3. Gold purity
The valuation of your loan depends on the gold quality. Most lenders require a gold of 18 carats or higher purity to process a loan. For gold jewellery valuations, gems and stones are not considered. Your lender may or may not accept gold coins and bars for a loan, depending on their policy.
4. Loan tenure
A gold loan is usually available for a short term. Ensure that you can repay the loan amount without defaulting before applying for a loan.
5. Interest rate offered
Gold finance is cheaper when compared to personal loans, but the interest rates can vary to a great extent. Therefore, do thorough research on interest rates before settling with one lender. You can use a gold loan interest rate calculator on your lender’s website to check the interest rate and amount.
6. Fees and other costs
Get a clear understanding of all the fees and expenses involved in gold finance. You might be liable to pay the processing fee while applying or the prepayment fee for early loan repayment.
7. Loan EMI
Making timely repayments of gold loans is essential to ensure that your credit history is not tarnished. You can plan out your monthly expenses beforehand by using a gold loan interest calculator. Understanding your EMI liability can help you save unnecessary trouble from defaulting repayments.
Conclusion
Gold finance is one of the oldest and most trusted finance options in India to meet immediate cash requirements. You can check out the gold loan interest rate calculator on your lender’s website and compare interest rates. Apply with a credible lender that gives you the lowest interest rate and best value for your gold.
