5 Factors which can’t be Ignored While Applying for a Gold Loan
Gold Loan and its Magnitude
Gold loan is an invariable asset through which one can obtain easy finance. However, people are still unaware about the factors to be looked upon while applying for a gold loan in India. If you want to avail the benefits of a gold loan, you can consider the following five factors:
1. Consider the Factors Affecting the Price of Gold
One should take a note of various aspects that indirectly or directly affect the gold loan interest rates, viz.
Global movements in Gold prices
Procurement of Gold by Government
Demand-Supply mismatch in the jewellery market
2. Tenure of Gold Loan
Gold loans are generally short term to medium term sources of finance. Based on the time frame, ensure that you repay it during the specified term and secure your gold back into your treasury.
3. Understand the Valuation Method of Different Banks
Understand the valuation methods adopted by the lenders. Remember, none of the lenders will provide entire value of your gold as loan. It is necessary to note that the amount of money obtained from gold loan varies in different banks based on the margin amount.
4. Learn about the Repayment Terms and Conditions
Enquire properly before you finalise the gold loan lender! Again, the repayment policies and structure vary from lender to lender. Some of the banks allow payment at the end of the tenure, while some of them also allow repayment in terms of instalments or EMIs. Note that EMI will include the repayment of interest and principal amount during the loan tenure.
5. Identify the Gold Loan Interest Rates
Consider the fact that interest rates on gold loans are higher than educational loans and home loans. Hence, you should evaluate the interest rates charged by different banks. Choose a suitable bank or money lender, after considering their repayment policy, tenure and the interest rates.