- Date : 20/12/2021
- Read: 3 mins
You should consider some important factors before applying for a gold loan. Read on to find out what they are.
Financial needs might arise anytime. If you happen to be short of money, you can avail of a loan to fulfil your needs. Among the different types of loans available, a gold loan is often the most convenient solution.
What is a gold loan?
A gold loan is a multipurpose loan that you can avail of for your personal and business financial needs. The loan is sanctioned against gold assets that you pledge with the lender. Gold loans have become very popular in this online era, which has sped up the loan disbursement process.
However, before availing of a gold loan, you need to ask yourself these questions:
How much gold as collateral is needed?
Remember, a gold loan is issued against the gold that you pledge. Depending on the purity of the gold pledged and its value, the loan is sanctioned. So, if you need a specific amount of money, find out how much gold you would have to pledge.
What is the gold loan EMI that you can afford to pay?
The gold loan EMI should be affordable so that you can repay the loan without burning a hole in your pocket. So, know how to calculate gold loan interest and arrive at an affordable EMI for the loan.
Is the Gold loan interest rate competitive?
Different lenders charge different gold loan interest rates. So, make it a point to shop around for the best offer and choose a lender with the lowest interest rates for saving on the interest cost.
What should be the ideal repayment gold loan tenure?
Gold loans offer tenures up to 5 years or even more. Remember, a longer tenure means a higher interest outgo. Use a loan calculator to find out a suitable tenure for which the EMI would be affordable and wouldn’t require you to pay a lot by way of interest.
What are the other fees and charges in gold loan?
Check the fees and gold loan charges - processing fee, late payment fee, prepayment fee, etc. Loans with a lower charge structure are better.
Is the gold loan flexible?
Lastly, check the flexibility of the loan. Flexibility means whether prepayment is allowed or not - and if it is, the charges involved. Also, some loans give you a credit line and charge interest only on the borrowed amount. Flexible loans are better as they allow you to save more and manage the loan as you see fit.
Though gold loans are easily available, go for it only after you answer these questions to your satisfaction. Check the gold loan eligibility requirements, know what is the gold loan process, and then apply.