Getting a loan against gold is an option that is available for those individuals who would like to borrow funds. However, there are certain requirements that are needed. Among these are documents, eligibility criteria, interest rates, and collateral.
Prepayment period
Taking a loan against gold requires some research and preparation. First, you should calculate the right amount of gold to get the best interest rate. You should also check the lender profile. You should not be surprised to find out that some lenders charge prepayment charges.
You should also consider the fact that gold is a precious metal and if you default on your loan, you will end up losing your precious articles forever. The amount you borrow may be more than you need, so you should plan accordingly.
The best way to save on your gold loan is by making part-prepayments. This can help you avoid the stress of having to return the entire amount.
There are several advantages of this, including increased peace of mind. Another advantage is that you can earn back a portion of the capital amount that you borrowed.
Documents required
Whether you need a loan against gold or want to make a purchase, it is important to understand the documents that are required for a gold loan. The documentation is relatively simple and straightforward. In most cases, you will only need to provide a few documents and your identity proof.
A few lenders may require you to fill up a form, but many banks offer a straightforward application. You can also apply online.
Depending on the lender, you may need to pay a processing fee. This fee can be as low as 1% or as high as 3% of the total loan amount.
Most lenders will offer a floating interest rate. However, some lenders charge a service tax and may also charge a prepayment penalty. You will need to compare the terms and conditions before deciding which lender to apply with.
Interest rates
Depending on the lender, interest rates on loans against gold can range from 7% to 18% per annum. The amount of money you borrow will also depend on the purity of the gold. The higher the purity, the more the loan amount you can get.
One of the best ways to lower the cost of a gold loan is to use a digital gold bond. A digital gold bond is an investment that pays a fixed 2.5% interest annually on the face value of the gold. These bonds are especially useful in situations when the overall cost of credit is high.
For instance, if you borrow Rs. 50,000 at an annual rate of interest of 10%, you will be able to repay the entire amount in around two years. That’s a relatively short time.
Collateral
Taking a loan against gold is a great way to secure your financial future. These loans are available at low interest rates and are easy to secure. You can use the money to start a business, pay medical bills or get emergency expenses. Whether you’re in need of a quick cash flow or want to take advantage of the rising value of gold, a gold loan is a great option.
You can choose to make the loan interest payable through the duration of the loan or you can make the principal repayment at the end of the term. If you decide to repay your loan early, you may have to pay prepayment charges. You will need to compare the terms of the loan offered by different lenders.
Eligibility criteria
Getting a gold loan can be easy if you have all the required documents in place. However, if you miss any one of the requirements, it may prove to be very difficult to get your loan sanctioned. Fortunately, a number of reputable gold loan providers can help you get your loan approved.
The eligibility criteria for a gold loan vary from lender to lender. For example, in addition to basic KYC documentation, you will also need to provide proof of identity and address. You will need to sign a loan agreement and other documents as well.
Conclusion
In addition to this, you will need to provide gold jewellery as collateral. The weight of the jewellery is used to calculate the quantum of loan you can receive. You will also need to submit two recent photographs.
