Things to Know Before Applying for a Gold Loan
Indian households purchase gold for any auspicious occasion, such as a festival or wedding. Despite its emotional value, gold can serve as a valuable asset when seeking financial assistance. You can leverage the gold as collateral to secure a loan from any NBFC or bank. With the flexibility to use the funds obtained from a gold loan for purposes like education, healthcare, personal, or commercial, it is an attractive option for people seeking quick and easy loans. The gold loan process is easy, requires minimum documentation, and is hassle-free. However, there are certain things you need to be aware of before applying for a gold loan.
Repayment Options
An important factor to consider is the repayment option, and a gold loan offers the flexibility of different repayment options. The first option is EMI, where you have to make regular monthly payments. You can also utilize the bullet payment service, which deducts the loan's interest from the loan amount. At the end of the loan tenure, you can repay it along with the loan amount.
Selecting a Lender
When it comes to selecting a lender, there are two options to choose from: a bank or NBFCs. The government of India regulates these. There are NBFCs that specialise in gold loans and offer more attractive interest rates. It is better to compare the features, interest rates, and documentation process of different banks and NBFCs before deciding where to get the loan from.
Type of Gold to be Pledged
The evaluation amount increases with the purity of the gold; the higher the amount, the more you will receive. The pledged gold purity is expected to be at least 18 karats. While determining the loan amount, the value of any gems or stones is also considered. In addition to jewellery, you can obtain a higher loan amount from gold coins and gold bars, which have a higher purity percentage.
Gold loans serve as practical financial solutions, providing flexibility and requiring minimal documentation to meet monetary needs. Making an informed decision requires understanding the gold loan process, evaluating the repayment options, selecting the right lender, and determining the type of gold to pledge. Additionally, tools like gold loan calculator can provide the gold loan eligibility, interest rates, and repayment amounts, making the process transparent and convenient.
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