Four Tips to Consider Before Getting a Gold Loan
Financial emergencies strike unannounced and you will be forced to liquidate all your investments, or borrow a loan. Personal loan are most sought options in the financial markets. However, they carry strict sanctioning procedures and stern credit checks such as very few end up getting it.
To fulfil the emergency credit requirements of needy individuals, banks like Axis bank have come up with a new form of loan. Banks are now offering loan against gold to individuals while keeping their gold belongings as collateral. As gold is held at collateral, gold loans are believed to be secured.
Before you go ahead to avail a gold loan, here are four basic tips that you should consider while getting the best deal.
1> Compare the interest rates
The interest rates levied on gold loans vary in the range of 12 to 15% as in case of banks. NBFCs charge higher interest rates which are up to 18%.
- Interest rate applied on the granted loans against gold vary directly according to the purity of the gold. Higher the purity, lower are the rates.
2> Credibility of lending body
Credibility issues arise when borrowing a loan from scheduled banks or NBFCs. Most banks grant loans only after assessing the repayment options of the borrower. Such loans may not be secure, and there are chances of your gold valuables getting tampered.Always choose established banks to avail a loan against gold as your valuables will always remain safe with them.
3> Valuation of Gold
Most of the NBFCs grant loan whose value is at times lower than the original gold value.Gold valuation is an important part of the loan sanctioning process. To get the best principal amount, always approach an established bank for an appropriate borrowing against gold.
4> Repayment and Defaulting Clauses
- Loan repayment tenures vary from 12 to 24 months on any given gold loan.
- Furthermore, many banks offer the option of repayment of total principal amount at the time of loan closure, while interest is to be paid on monthly basis.
- Select the repayment term as per your convenience.
- Similarly, in case of non-repayment, banks pre-intimate the borrowers before utilizing the gold assets. Ensure that such procedure is available with the lender in order to safeguard your valuables.