Gold Loan Processing (Photo Credit: social media)
New Delhi:
Gold is a precious metal that represents prosperity and financial security, which is the prime reason for its increasing popularity. It is used in various forms, such as gold ornaments, gold coins, gold bars, etc., across Indian households.
The convenience of getting quick funds, coupled with lower interest rates and flexible repayment options, contributes to gold’s popularity. In fact, you need only submit basic gold loan documents and you can pledge your precious metals to get funds almost instantly. However, this requires proper attention, and any error can lead to gold loan rejection. You also need to check essential factors, such as the gold loan tenure, interest rate, etc., before selecting a loan offer. To simplify the gold loan process and help you avail a gold loan hassle free, read on.
Essential Points to Consider When Availing a Gold Loan
1. Ascertain the Credibility of the Lender
Checking the credibility of the gold loan lender is crucial when considering a gold loan as you are pledging your valuable assets. Conducting a background check of the lender ensures that you are taking a loan from a trustworthy and reliable lender. Check the reputation of the gold loan lender in the market. You can do so by contacting past clients of the lender and checking online reviews.
Also, verify if the lender has the required licences and if they are legally authorised to provide gold loans. This ensures that the loan lender abides by specific rules and regulations mandated by the RBI.
Another essential point to assess is the financial transparency that the gold loan lender offers. You need to check the repayment structure and the fees and charges, which include processing fees, foreclosure charges, etc.This protects you against any unexpected financial surprises in the future, which may affect your budgets.
2. Research and Explore Various Options
When it comes to applying for a gold loan, conducting thorough research and exploring various options available in the market is critical to make informed decisions. Various lenders offer different interest rates and gold loan tenure options. To simplify the process, scout for gold loan lenders offering affordable interest rates. Having a lower gold loan interest rate is essential as it reduces your overall borrowing costs. This leads to significant savings in the long run. Another essential feature to look for is the gold loan tenure. A longer gold loan tenure helps lower your monthly instalments. However, this also means you will end up paying higher interest on your gold loan. Hence, choosing a gold loan tenure according to your affordability is essential for smooth loan repayment.
3. Check the Value of Your Collateral
Prior to finalising your gold loan offer, paying attention to the value of your collateral is a must. The current value of your collateral depends on various factors, such as the purity of your gold, existing gold rates in the market, etc. To get a clear picture of the value of the gold you plan to pledge, visit a trustworthy jeweller. They check the purity of your gold by conducting several tests on your gold. Once the purity of your gold items is determined, the jeweller takes the existing market rates into consideration and provides the current value of your gold.
With higher gold purity, you have easy access to a higher amount. On the other hand, if your gold item is not of adequate purity, you might not get the loan amount you require. Also, your loan may get rejected based on the quality of your gold.
4. Pay Attention to the Rate of Interest
Yet another discerning factor you need to consider when planning to avail a gold loan is the interest rate offered by the gold loan lender. Your gold loan interest rate is an essential factor since the cost of your loan and the repayment entirely depend on it.
Various gold loan lenders available in the market offer different interest rates based on the loan amount you require, the gold loan tenure, and the lender’s policies. Generally, gold loan interest rates are comparatively lower when compared to unsecured loans since you pledge collateral with the lender.
Nevertheless, you still need to compare interest rates offered by various lenders to get the best deal. This not only helps reduce your interest outgo but also helps you save money. Look out for gold loans during special holidays and festivals, as many lenders provide discounted interest rates and other offers during this period.
5. Explore EMI Alternatives
Your loan repayment generally includes monthly instalments or EMIs. Know that there are various kinds of alternative methods to repay your gold loan which you can consider. Here are some of these alternate EMI options:
Daily EMI Option:This requires you to make your EMI payments on a regular basis
Partial Payment: You can pay a part of your loan outstanding whenever possible according to your affordability
Bullet Payment: This payment option includes paying the loan outstanding, which includes the principal and the interest amount, in a lump sum at the end of the loan tenure
Interest Now and Principal Later: You pay the interest of your gold loan normally according to the decided schedule and make the principal payment at the end of the tenure
You can check these repayment options that may help you streamline the gold loan repayment process and aid in avoiding financial overburden. A gold loan is an essential financial instrument that can help you cover your unexpected expenses. The application process for your gold loan needs to be submitted properly, which includes your gold loan documents to increase the likelihood of getting your gold loan approval.
Along with that, adhering to the aforementioned tips can help you leverage great gold loan interest rates, favourable gold loan tenure and affordable monthly payments on your gold loan.
