In the current economic condition, self-owned assets like gold are among the few things that you can rely on in a cash crunch. This was one of the reasons that there was a hike in the demand for gold loans in recent times. Businessowners leveraged this asset to address a shortage in capital, and this is a smart way for salaried borrowers to utilise the precious metal too.
Gold Loan in India
In Indian families, gold serves many purposes and using it as collateral when availing of the best gold loan in the market is both convenient and opportune. However, considering that the price of gold has been corrected several times in the last few months, taking a loan on gold requires thorough planning. Here are a few important things to know before you apply for an online gold loan.
Loan amount offered on Gold loan
The most important thing to note as a borrower is that the sanction offered depends on the valuation of the gold. With high purity of gold, you can qualify for a larger sanction. Typically, you are required to pledge 18k or 24k gold to the lender. Any precious stones or other metals will reduce the purity as only the actual gold is taken into consideration.
Besides the purity, lenders are permitted to offer up to 75% of the gold’s value as a sanction. The cap was briefly lifted to 90% by the Reserve Bank of India, until 31 March 2021, to improve credit flow. These pointers about the loan sanction are crucial to remember as you shouldn’t overleverage your asset or risk losing it.
Tenor of the loan
Unlike other secured financial offerings, both an offline andonline gold loan is offered only for a shortterm. Lenders usually offer a tenor that ranges between 12 and 14 months. There are some lenders who offer a longer tenor, sometimes up to 3 years, and others that allow extensions, if necessary. However, in general, these loans come with a shorter repayment duration, and you should account for that before you borrow.
Consider the timeline and the EMIs payable to ensure that a loan on gold is an undertaking you can handle. In the current economic conditions, where earning capacities aren’t optimal, borrowing unwisely could cost you the asset.
Interest rate and other charges applicable
As with any other loan, the interest rate and fees applicable on the loan are crucial elements you can’t overlook. This is especially true in the case of a gold loan because these rates vary quite drastically across lenders. Avoid simply picking a lender with the lowest rate. Instead, scout for credibility and security as well as value-added features that make borrowing easier.
In addition to the interest rate, inquire about the charges on the loan. Lenders will have processing, evaluation, stamping, and other such administrative fees, which usually amount to a set percentage of the loan. Aside from these, be sure to check the foreclosure and prepayment charges, as some lenders don’t levy a fee for such payments. This makes repayment easier in your pocket.
Form of gold accepted
When taking a loan on gold, you should know that lenders only accept two forms of gold. These are gold jewellery, which has to be between 18k and 22k, and bank-minted gold coins. You may not pledge bars, and in the case of coins, there may be some weight restrictions applicable. In most cases, lenders will accept up to 50g in coins, so long as they are of 24k purity.
When it comes to a gold loan, there are several repayment options you can choose from. The first is the regular EMI, where the loan is to be repaid regularly, on a month-to-month basis. The second is through a bullet payment, where the entire amount due is calculated monthly and the total payment can be made at the end of the tenor. The third option is where you can choose to pay only the interest upfront and pay the principal at the end. Lastly, you can opt for an overdraft, where you only pay interest on the amount you borrow and can borrow from your approved sanction, as needed. Choose the one that best suits your finances and needs.
Besides these factors, be aware of the numerous online gold loan provisions in the market. Reputed lenders have made these available to borrowers looking to access funds quickly and without hassles. This type of feature is something to look for when deciding on the best gold loan for you. Online tools can expedite loan application and processing, making things a lot easier. An offering with such features and more is the Bajaj Finserv Gold Loan.
Here, you can get approved for a sanction of up to Rs.20 lakh, at a flexible tenor and a competitive interest rate. The in-house evaluation using a carat meter ensures that you get a fair sanction, for any acceptable form of gold that you pledge. What’s more, Bajaj Finserv has world-class safety protocols and you can be assured that your gold ornaments are safe and sound all through. You can also enjoy the part release facility to access some of the gold collateral during the tenor and enjoy nil charges on part-prepayment and foreclosure. To start your journey as a borrower right away, apply online by filling the easy form with basic details.
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