At the end of this article, you will be able to
- Determine how Does a Gold Loan Works?
- Know the types of people who are eligible for a gold loan?
- Figure out what is the rate of interest on a gold loan from a lender?
- Define what is the term of the gold loan?
- Know what factors do lenders consider when determining the amount of a gold loan?
- Characterized what is the best way to repay the gold loan?
Ques 1: How Does a Gold Loan Work?
India is among the nation’s biggest gold consumers. According to the World Gold Council, India’s annual gold demand increased by 803% from 1988 to 2017. Aside from being used for industrial, commercial, & investment purposes, the precious metal can also be used to obtain a loan in the event of a financial emergency. In fact, a gold loan is among the simplest and quickest ways to get money when you need it most.
Ques 2: Who can apply for a gold loan?
A gold loan is available to anyone who owns gold. Unlike personal loans, which have strict eligibility requirements, gold loans are available to any Indian citizen, including salaried businessmen, professionals, housewives, and even farmers. To be qualified for the best gold loan in India, you wouldn’t even need a good credit score. So, even if you have a bad credit score, you can still get money when you have enough gold to pledge as collateral.
Ques 3: What is the rate of interest on a gold loan from a lender?
Because a gold loan is a secured creditor, the interest rate is lower than an unsecured loan like a personal loan. The rate of interest charged on gold loans differs from one loan company to the next and is determined by a variety of factors such as the length of the loan, the amount borrowed, and so on. It also depends on whether you get your gold loan from a bank or an NBFC. For the enthusiast people living in Pune and making India proud are availed of a gold loan in Pune very easiest way.
Compare gold loan providers of at least two to three lenders before making your decision.
Ques 4: What is the term of the gold loan?
The prepayment period, also known as the gold loan tenure, varies by the lending institution. Depending on the circumstances, some lenders may offer a longer-term or allow you to renew your loan to extend it. Because the term of a gold loan is shorter than that of other types of loans, make sure you pay it back on time. If you default on gold, you may lose all of your gold articles forever.
Ques 5: What factors do lenders consider when determining the amount of a gold loan?
Lenders examine the purity & weight of the mortgaged gold before endorsing the loan application. The market value of gold is ascertained based on its current rate, which aids in determining the final gold amount that will be approved by lenders. Most lenders will offer a gold loan worth up to 75% of the market value of the pledged gold. For example, if your gold is worth 2 lakhs, you will be approved for a loan of no more than 1.5 lakhs. Aside from the loan-to-value ratio, the loan amount is determined by a number of other factors, including the loan’s tenure as well as the borrower’s repayment ability.
Ques 6: What is the best way to repay the gold loan?
Your lender will determine how you pay back your gold loan. The majority of lenders allow you to pay only the interest each month and the principal at the end of the loan term. You can also pay off your gold loan in EMIs (Equated Monthly Instalments), which also cover both the interest and principal.
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