Now a day’s Gold Loan are gaining popularity in India and while they are well over many other types of loans, following are a few things that you should remember previous to receiving Gold Loans in India.
Now a day’s add on television commercials singing ‘jab ghar mein pada ho sona, fir kahe ko rona’, the many people pick for gold loans has raised. Also many banks and Non-banking financial company (NBFCs) paint an emotional picture of them with how they beseech for your gold and keep your savings of life’s in Gold secure till you refund the loan. Everyone these and an awareness of a general trend that there are different ways of receiving loans instead of the typical own loans and credit card loans (you can find other investment options in the stock market Trifid Research will give you better tips Example Stock Tips, Commodity Tips, Option Tips and Nifty Tips etc. ); Gold loans have seen a rise in popularity.
While it certainly makes sense to pick for Gold Loans over own loans (here is why) to meet your requirements of short term financing and also not pay higher interest rates of other loans, here are certain things to keep in mind previous to opting for Gold Loans in India:
- Short Term Loan: foremost and First, Gold Loans are for Short term only. They are generally for a period of 1 year and in a few cases to 2 years at max. Therefore make sure whether you are able to refund the total amount of loan in that time frame or require more time. If you cannot refund in this much time, Gold Loan is not for you. Therefore if you can, then Gold Loans are a better way of receiving fast cash to fulfill the financial empty in case of disaster.
- Rate of Interest: While interest rates on Gold Loans is lower than loans of Personal on any day; there is still a difference in rates of interest when it comes to Gold Loan give by Non-banking financial company (NBFCs) and those are given by Banks. Most Banks will charge lower interest than the Non-banking financial company (NBFCs) and public sector banks charge the lowest between that. So if you can benefit a rapid gold loan from a bank, to choose that over any Non-banking financial company (NBFCs). Your local jeweler may too provide you a Gold loan and that too at a much lower interest rate than banks or Non-banking financial company (NBFCs). But make sure trust them and you know them personally.
- Calculation of Gold Value: keep in mind that the amount of loan you are free to get is limited up to 80-90 per cent of the value of Gold you assured against it. So if the worth of your gold (in any form coins or jewelry etc.) is say 1, 00,000 INR then you can obtain gold loan for an amount up to 90,000 to 10, 0000 INR only.
- Calculation of Loan amount: The additional thing to consider is the method in which the valuation of gold is done by the lending institution. A few calculate the previous 2 weeks price of gold and then take an average price for determining the rate of gold per gram; while a few take the everyday rate for valuing your Gold. Consider which one suits you and provides a maximum value to your gold. For example if the average of previous 2 weeks comes to approximately Rs. 26,500 while now a day’s gold price is approximately Rs 27,000; it better to makes sense to go to the one offering to value at on that day’s rate and vice-versa.
- The credibility of your creditor: Gold Loans are quick and need almost nil paperwork and there is a reason for that. For the creditor it is a much secured loan to provide as they have your Gold with them as a safety in case you plan to not pay up or fail on your payments. Therefore, this also increases the question of security of your Gold till the time it is pledged to them. Do a thorough check of the creditor and what sort of security measures they take to defend yourself Gold while is staying with them previous to take a benefit of loan from them. Always select the ones that have a confirmed track record and are reputed even if it means to pay a little higher interest rates, as finally your Gold’s protection is important.
- Type of Gold mortgaged for a loan: One thing you should be conscious of is that the banks and lending institutions in exacting choose gold jewelry over gold coins to be mortgaged as security for Gold Loans in India. They believe jewelry has a sentimental attachment and thus make sure time to time repayments to defend it against confiscation by the banks for non-payment. Therefore you can always negotiate on this part and can resolve for a slightly lower change or amount in the rate of interest, in case you have more of money and loss of jewelry. Or you can choose for the institution that accepts money as well.
- Default on loans or Past repayment: If you plan to go to a bank where before you have defaulted on credit or loans, they may guild this with the due amount and you may have to pay up the before due amount previously to you can get your gold back even after paying your gold loan. While I do not stimulate you defaulting on any payments or any non payments; if you have so in the past history, just be careful previous to going back to them.
- The Structure of Repayment: The structure of repayment in case of Gold Loans is more flexible as compared to any other loans and you can choose from just paying interest through Equated Monthly Installment (EMI) for the whole tenure and at the end of the tenure you pay your main amount and take your Gold back. Therefore, A few banks may also want you to pay a few parts of principal on your Equated Monthly Installment (EMI) along with interest rates. So be better understood the repayment terms carefully previous to benefit from Gold Loan.
Nowadays Gold Loans are maybe the fastest and easiest to get and therefore are now a day’s most of the people preferred them with many people being open to it and not looking it as a matter of disgrace, like it used to be. But still one of the most important things is aware of the above mentioned points previous to opting for Gold Loans in India.