Gold loan is one of the quickest and easiest ways to make money with your gold and earn money only if you have the . This loan can be used by anyone who owns gold in the form of jewelry or as gold coins or bars. In addition to banks and jewelers in your area, many NBFCs also focus on providing gold loans to retail customers. Many banks use the NBFC as a last resort for gold lending in rural and urban areas.
Important features to know about a gold loan before getting the same
Know how much credit you can get. The bank or financier will look at the equivalent of 22-carat gold. So if your gold has an equally low carat the value will be reduced. Usually, banks will offer you loans up to 70% of the market value of the tested value of gold. Gold loans do not apply to any incoming documents other than your basic PAN card and Aadhar card. What is the considered price? It varies. Some look at the daily price of gold while others look at the weekly or weekly gold price to get a clearer picture. The loan is secured with a physical promise of gold in the bank.
You should negotiate the best interest rates. Generally, the interest rate on Gold loans is very small compared to personal loans because the ICICI gold loan is secured while the personal loan is not secured. In general, NBFCs charge higher interest rates compared to banks as they have higher financial costs. The interest rate varies between 13-15% in most cases. Don't promise gold by jewelers because they may not be very reliable.
A gold loan is a short-term institution, usually for up to 12 months. It must be paid after that period. You can contact your bank to extend the loan period by another 1 year depending on the terms and conditions you agree to. Make sure you are in a position to repay the loan within the allotted time. Gold loans are good in emergencies but there are worse ones. In the unlikely event that you do not pay at the time, your gold will be auctioned off and you usually end up getting a negative amount of your gold in these cases.
Is creditworthiness important? It does because you keep your gold there. The lender will feel secure as he holds the gold as collateral if the borrower does not pay. However, the value of your gold is higher than the value of the loan and you are not sure if you will repay the gold. Before going to a lender check the backgrounds and know the security measures taken by the lender to protect your assets. Finally, the gold you bind should be in safe hands. So choose a well-known RBI-controlled bank where you can be sure.
Lastly, but not least, clearly understand the structure of a gold loan. There are various options. Gold loans usually have a flexible payment structure compared to other loans. In all banks, the structure of the gold loan may vary. At most banks, you can choose to pay the interest rate over time, and at the end of the period, you can pay the principal amount and return your gold. This is your favorite model. But some banks also require you to pay a portion of your principal each month. This can work to be very expensive for you.
Conclusion: It is important to understand the terms carefully before obtaining a gold loan. After all, if you do not pay on time, the bank has the right to auction the gold after giving you the proper notice. So beware of that and try to repay the loan on time.