Gold loans are an easy option for people in need of quick cash. It is a secured loan backed by your gold jewellery and is preferred for low-interest rates and easy repayment options. There are many banks and NBFCs that offer gold loans, but before taking out a gold loan, there are a few things that the borrower needs to keep in mind.
Purity of Gold: The borrower must know that the purity of the gold being pledged determines the loan amount that one can avail of. The minimum requirement is usually 18 carats, but the loan amount certainly increases if the gold is of higher purity. Borrowers should also be aware that the value of precious stones ingrained is not considered while evaluating the purity of the gold in the ornament. Financial institutions always have an authorised evaluator with them. So the metal’s purity can be quickly evaluated, and the whole application and disbursement process gets completed without any unnecessary delay.
The Loan-to-value ratio: Before applying for a gold loan with any bank or financial institution, it is advisable to know the LTV. It implies that if the LTV that the NBFC offers is 70%, the borrower will get only 70% of the total value of the gold. Borrowers must apply for such loans only with the best gold loan company in India as they are known to offer up to 75% LTV.
Interest Rate: Before applying for a gold loan, the borrower must look at various offers and opt for the financial institution willing to offer the loan at the lowest interest. Since this is a secured loan, the interest rates are comparatively lower, but to get a better value, it is always advisable to compare.
Repayment Plan: People usually opt for a gold loan whenever there is some urgent need for cash. As such, it is extremely important to know about the repayment plans so the amount borrowed can be returned without it becoming a burden. Reputed NBFCs usually have flexible repayment plans and are always the best option for such loans.
Besides these, before opting for a gold loan, the borrower should also check the lender's reputation, the processing fee, if any, and the amount of insurance premium that may be charged. Thorough knowledge of all these aspects can immensely help people in getting gold loans without any hassle.