You Should Know About This Before Getting a Gold Loan
Gold is and will be a valuable asset, not just on the emotional side but also on the financial one. When you need a quick fund, you can apply for a gold loan in a snap. They are the easiest and the most accessible way to secure credit. However, before choosing, it is very important to understand some key factors. A gold loan gives you instant liquidity while keeping your gold safe. It usually comes with competitive interest rates compared to personal loans, making it a cost-effective borrowing option.
Here’s everything you should know before taking a gold loan.
What to Check While Taking a Gold Loan?
Before proceeding with a gold loan, you need to tick these checklists:
The first one is Interest Rates. Different lenders offer different interest rates. Analyse the rates to find the most affordable option. The next thing to keep in mind is the Loan-to-Value (LTV) Ratio. Lenders provide up to 75% of the gold’s market value as a loan. Affirm you get the best possible valuation. After interest rates and LTV ratio, think about Processing Fees & Charges. Some banks and NBFCs charge processing fees. Clarify any hidden costs beforehand.
Also, you should check for the available repayment options and choose one that suits your financial situation.
Most lenders accept gold of 18 to 24 karats; lower purity may result in reduced loan amounts.
Why Gold Loans are the Best?
Gold loans have several benefits, making them the best choice for many borrowers. The first is the Quick Disbursal. Applying for a Gold Loan has minimal documentation facilitating fast processing, and making it highly accessible. Unlike other personal loans, lenders don’t need your income verification to allow a gold loan. Also, you can choose from multiple repayment plans. Gold loans have competitive interest rates compared to unsecured options. The best part is, that even if you have a low credit score, you can easily avail of a gold loan.
How to Apply for a Gold Loan?
You can do it with these simple 4 steps.
Step 1: Choose a Lender Compare banks and NBFCs to find the best loan terms. If you have a lender like Manappuram Asset Finance, you are all set to go.
Step 2: Visit the Branch or Apply Online Some lenders like us offer online facilities after you re-pledge your gold for your convenience.
Step 3: Submit Gold and Documents The gold is evaluated, and the required documents are verified.
Step 4: Loan Approval and Disbursal If all conditions are met, the loan amount is disbursed instantly.
Is It Advisable to Take a Gold Loan?
Gold loans are your option if you need short-term liquidity. However, read the following before deciding. If you need a small loan for immediate needs, a gold loan is a good choice rather than a personal loan. If you have alternative sources of funds, compare the costs before pledging gold. Avoid the risk of losing your gold by repaying your loan on time.
The Eligibility Criteria for a Gold Loan
The eligibility criteria for a gold loan are simple than you think. The first thing is that you must be above 18 years of age.
The second is that gold pledged must be owned by the borrower. The person who pledges the gold must be responsible for the loan taken.
Some lenders may have minimum weight requirements for the gold. There are no strict income criteria, making gold loans accessible to all.
What Documents Are Required for a Gold Loan?
Most lenders require minimal documentation:
● ID Proof: A document verifying your identity.
● Permanent Address: An address that you are permanently residing in.
● Temporary Address: In case you are living in a rented space, you could give this rental address.
What Is the Minimum Gold Loan Amount?
The minimum gold loan amount varies by lender. Some financial institutions offer loans starting from ₹1,000 to ₹5,000. The maximum amount depends on the value of the gold and the LTV ratio. Higher-purity gold will give you a higher loan amount.
What Are the Repayment Options?
The most common and the best repayment option we provide is the Bullet Repayment option. Let’s understand what is a bullet repayment option.
In this method, you can pay your interest regularly and the principal at the end of the term. With this method, you get flexibility and gives you an advantage if you want to minimise regular payments and settle the entire amount, all at once.
What Are the Risks of a Gold Loan?
While gold loans have many advantages, they also carry risks. The risk of Losing Gold is the primary one. If you fail to repay, your gold can be lost in auction. Missing payments can result in penalty charges and this can turn out to be high interest rates. Market fluctuations can result in a drop in gold prices. This can affect your loan-to-value ratio while going for renewal.
Loan Repayment is Delayed, What’s Next?
Failing to repay a gold loan on time comes with consequences. One of them is that lenders can charge penalty interest on overdue amounts. Gold loans don’t require a high credit score, but failing to repay can have a negative impact on your credit history. If you are not able to repay, the lender has the right to auction the gold to recover the outstanding amount.
Conclusion
Gold loans are ideal for immediate funding. However, make sure that before applying for a gold loan, you should compare lenders, repayment terms, and interest rates for the best deal. When borrowed on time, a gold loan can help one maximize income.
Looking for a trusted Gold loan partner? Manappuram Asset Finance stands out as the best in the field. With competitive interest rates, flexible repayment options(not applicable to every case), and a stress-free process, we help to make your gold loan experience smooth and secure.
Apply for a gold loan with Manappuram Asset Finance today and get the financial support you need!
