5 things you should know before you go for a Gold Loan
A gold loan is the best way to manage your finances during a cash crisis. It is a secured loan provided by financial institutions. Much of its popularity stems from the fact that it serves multiple purposes, such as medical emergency, education, travel, home renovation, debt consolidation, etc.
The lender determines the loan amount based on the market value of the gold items submitted as collateral, based on its weight and purity. The higher the value of gold, the higher will be the loan amount. Since it is a secured loan, a credit score does not play much of a crucial role.
Here are the top 5 things to remember before applying for an online gold loan:
- Loan amount
As stated earlier, the gold loan amount depends on the market value of the gold items pledged as collateral. Most lenders offer up to 80% of the gold’s value as a loan, which can be equivalent to Rs. 30,00,000/-. But, keep in mind that the higher the loan amount, the higher will be the interest rate. Generally, lenders charge a higher interest rate on the higher loan amount to justify the risks involved. So, if you secure a lower interest rate on your gold loan application, make sure to opt for a lower loan amount. Gaziantep escort
- Interest rates
Compared to unsecured loans, the gold loan interest rates are lower. But, the online gold loan interest rates are determined based on factors, such as loan amount, income, credit score, current financial obligations, etc. Depending on the lender, the gold loan interest rate can range between 6.9% to 20%. Before applying for a gold loan, make sure to compare different lenders’ interest rates and choose one that best services your preferences.
- Processing fees
The interest rate is not the only cost associated with an online gold loan. You will have to incur a processing fee to obtain a gold loan. The processing fee can range between 1% to 2% of the total sanctioned loan amount. While applying for a gold loan, make sure to check the lender’s processing fee. This way, you can make an informed decision.
- Loan tenure
Generally, gold loans are short-term. It means that you will need to repay within 1 to 3 years. Even though you can choose a longer loan tenure, you should avoid it if you wish to reduce the total cost of borrowing. Choose a loan tenure based on your needs. If you have enough funds in your account, make sure to opt for shorter loan tenure. It enables you to save interest. Gaziantep escort bayan
- Lender’s credibility
Another crucial point to keep in mind before applying for a gold loan is the lender’s credibility. Before applying for a gold loan, you must find a lender that has been in the business for a long time and has a great reputation. To check the lender’s credibility, you can check the online reviews and testimonials, which offer great insight into their services. It allows you to find a lender that offers the best rates and services.
Conclusion
A gold loan is the best way to meet your financial requirements without putting any burden on your savings or investment. You can secure up to 80% of the gold’s market value as a loan at affordable interest rates.