Mallika Dureja
The 15th of February in New Delhi, India: People in India like to buy gold items as a sign of wealth. Buying gold is also one of the most popular ways for Indians to invest their money. And when the time comes, the gold items or jewellery can be sold to make money when money is needed quickly. To get a gold loan, you can use your gold jewellery as security. But if you want a gold loan, you should only think about a reputable non-bank financial company or a bank.
A gold loan from a local jeweller or a small-time lender is often an unsecured loan because the lender decides how much your collateral is worth. In these situations, it’s also hard to know if your gold jewellery will be safe and secure. So, you should choose a bank or an NBFC if you want the best deal. And if you want to get a gold loan, make sure to think about the following:
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Taking stock of gold
Gold that you keep as collateral is judged by its weight and how pure it is. If you want a gold loan, you need to make sure that your gold item is at least 22 carats. Also, your gold must have a hallmark for the lender to accept it. Know what kinds of gold can be used to get a gold loan. Most banks and non-banking finance companies won’t lend money based on gold bars or coins. Only gold jewellery can be used as collateral for a gold loan.
How to pay back a loan
A gold loan with a reasonable way to pay it back will help you plan your finances much better. If you take out a gold loan, you will be able to pay it back faster and even pay less in interest. People often choose to get a gold loan because they can choose when to pay it back. The best thing about a gold loan is that there is no minimum time you have to pay it back. Find a lender who will give you a loan with a low interest rate or a high loan-to-value (LTV) ratio to get the best deal on a gold loan. LTV ratio is a financial ratio that compares how much money was borrowed to how much gold was selling for on the market.
Getting an idea of how much gold is worth
The amount you get in exchange for the collateral is based on how much gold was worth on the market that day. Lenders use the price of gold to figure out how much it is worth. Carats are a way to measure how pure a piece of gold is.
Gold in its purest form is too soft to be used to make jewellery. So, your gold jewellery is made up of about 91% pure gold and 9% copper, zinc, cadmium, or silver. It is easy for a lender to tell the difference between pure gold and gold that has more of these alloys mixed in. Gold’s market value changes every day because of trade, supply and demand, and other things.
Who can get a gold loan?
How you can get a gold loan depends on what you put up as collateral. Other types of loans, like loans against property and personal loans, have specific eligibility requirements, like the applicant’s age, employment status, credit history, or financial stability, among other things. In the case of a gold loan, a gold loan calculator helps check eligibility based on the weight, purity, type, and composition of the gold item. To reduce the risks of giving you a loan, the amount you can borrow against the gold may not be equal to its value. But again, this is different from one lender to the next.
Look around to find the best plans.
People would rather get a gold loan than a personal loan or a loan for their home. Gold loans are better than other kinds of loans because they have lower interest rates. Also, fees for processing and other costs are usually lower with gold loans. Find a bank, financial institution, or non-bank financial company (NBFC) like Muthoot Finance that requires little paperwork and gives out loans quickly. Look into different types of gold loan plans to see which ones will help you the most. Remember that loans with shorter terms will have lower interest rates. Before giving your gold as collateral for a loan, you should find out how much it is worth at the current gold rate in India. Instead of getting a loan that you don’t have to pay back, you should get a secured gold loan. A secured loan is one for which you have to put up something as security. A gold loan is a secured loan that lets you use an asset that isn’t being used.
