A gold loan is more like a personal loan when the ways of usage by the end-user is considered. Like a personal loan gold loan too can be used as per the wisdom of the borrower. It may be used for personal endeavours or any investment purposes. In short, the end-user is not capped by the banks. In a gold loan, an individual can apply for a gold loan at the bank. They provide loans on the basis of gold which you are willing to put as collateral with the bank. The bank verifies the quality of gold in carats and also the weight according to which they are able to offer a loan. As the loan is secured by gold and the risk factor for the bank is very low so they are able to provide the borrower with a better interest rate. The loan is to be paid back in EMI’s (Equated Monthly Instalment) which are calculated by the banks. This EMI is calculated by taking into consideration three factors. They are as following -
- Amount- The amount of money that is sought in form of a loan by the borrower.
- Interest- It is the amount charged by the banks for giving out a loan. This is also the banks earning. It is charged on the loan amount that s borrowed.
- Tenure- It is the time limit for which the loan is sought. It may be a few months or even years.
So these three factors when considered help one in finalising the EMI to be paid by them. gold-rate/gold-rate-today Gold Rate Today is making new highs every day. The prices have skyrocketed during the covid-19 pandemic showing its importance once again. Gold is considered a good investment by millions of households in India. They have gold not only as a form of investment but also lifestyle in the case of gold jewellery and ornaments.
The ornament or jewellery can be verified by the bank for quality purposes. As jewellery is considered very important in India and loan secured by that is also important. Banks pay special emphasis on the benefits that one gets with the loan. Their jewellery is kept safe in the bank with the guarantee of any theft or damages to it. Many individuals don’t have assets like a car or property to put as collateral to secure a loan from the bank. This is where the gold they have can help them get a loan. gold-loan/HDFC-gold-loan.
HDFC gold loan is offered by the bank. The bank itself is around 72 years old and has been one of the leading institutes in lending out loans against gold. They not only consider solid gold coins or bricks but also any gold jewellery or ornament also. Gold is a very ductile metal. It has to be mixed with impurities to make ornaments. The bank also has ways to analyse that and found the exact value of gold in the ornament which helps them to quote for the loan. Partial or complete repayment of the loan before maturity is also welcomed by them. Usually, a bank may charge some amount for prepayment because their expected earnings from the loan in the form of interest are affected but with Manappuram loans, they don’t charge for prepayment in most of the cases which makes them one of the people choice bank for gold loans.
Conclusion
The end usage of the funds given by the bank for the gold loan is entirely up to the borrower’s wisdom. They are free to use the funds the way they want to. The money has to be paid back to the bank in EMI’s. As long as the borrower is able to pay the EMI on time there is no problem that could come.