A gold loan is a secured credit facility that comes in handy during unforeseen financial crises. It is one of the easiest and best loan options for customers today who wish to get financial aid without hassle. Those who want to opt for this credit facility should know these tips and use a gold loan calculator to determine the affordability of a gold loan.
Before opting for this credit facility, willing applicants should have a few factors in mind. Here are a few efficient tips for those who want to apply for a gold loan:
Tip 1: Pledge gold articles of high purity
In India, a number of prestigious financial institutions provide gold loans. Nevertheless, the loan amount varies from lender to lender. Loan amounts are increased for candidates who pledge high-purity gold jewellery. The designated evaluators of the lending institutions evaluate the gold’s purity and determine the loan amount as per their assessment.
Depending on the conditions of a lender and the LTV (Loan to Value) ratio, a candidate may be eligible for a significant loan amount. Gold jewellery of 22 karats or more is regarded as being of significant worth and can be pledged to apply for a sizable loan amount.
Further, borrowers should know that they cannot pledge gold coins and bars in order to obtain a gold loan.
Tip 2: Verify the legitimacy of the lender
Keeping gold jewellery as collateral is a substantial financial commitment; thus, when asking for a gold loan, one must select a reputable lender. Prospective borrowers must refer to other customers’ reviews and choose a lender as per those comments. Additionally, applicants should look into the precautions the lender takes to keep the jewellery safe during the repayment tenure.
Tip 3: Check the interest rate
In order to determine whether this credit facility is affordable, willing borrowers should also look into the interest rates charged by different lending institutions for gold loans. Financial institutions provide gold loans at a rate that is significantly lower than those for unsecured loans. In this regard, willing borrowers can use a gold loan EMI calculator to compare the different interest rates in the market and settle for a lender that offers the best terms.
Tip 4: Select the most feasible form of repayment.
Although there are several different ways to repay a gold loan, borrowers must choose the one that best suits their financial situation. The top financial institutions offer the following methods for paying back a gold loan:
- The borrower can pay back both the principal and interest at the conclusion of the repayment term by choosing a bullet repayment. Borrowers who choose this repayment option can easily manage their monthly budget because they do not have to worry about making EMI payments.
- Additionally, borrowers have the option to pay the principal amount after the repayment tenure and the monthly interest as EMIs. People in financial difficulty might choose this option and escape the strain of making significant EMI payments.
- Candidates might choose an overdraft option as well. Individuals have access to a credit line through this option, which they can use as needed to meet their needs. Borrowers who choose the overdraft option are responsible for paying the interest on the amount of credit that was used.
- Last but not least, one has the option of paying back a gold loan via Equated Monthly Instalments (EMI). However, willing borrowers must make sure to make the monthly repayments in a disciplined manner to keep their pledged gold safe.
Benefits of opting for a gold loan
Some of the beneficial aspects of applying for a gold loan are as follows:
- Any candidate with valuable gold can apply for a gold loan
- Borrowers receive a free insurance of gold policy
- Candidates can select a part-release facility as per their financial standing
One of the simplest ways to get a significant loan amount during a financ ial crisis is a gold loan. Candidates should compare many lending institutions before applying for this secured loan, then choose the one with the best terms. One can use a gold loan calculator and make an informed decision as per the results of the tool.