We all need urgent money to meet the financial goals and requirements at some point in our lives. It can either be due to your children’s wedding or higher education, which requires a lot of money. Many people consider gold loans to be a viable option and hence go ahead with the same.
What is Gold Loan?
Loan against gold are the ones where you keep your gold jewelry as collateral for money. The amount of loan you get is usually dependent on the value of your gold. Once you repay the loan completely., this jewelry is returned to you, but if due to some reasons you fail to repay the loan, then this jewelry is seized and taken by the lender.
The Advanced Buying Guide to Gold Loan
Some of the essential documents for a gold loan include identity proof such as an Aadhar card, driver’s license, or PAN card. You will also need to submit an address proof that maybe a telephone bill, electricity bill, or ration card. A signature proof is also required, like your passport copy or driver’s license. Some lenders also require you to give passport size photographs and income proof.
Since gold loans are secured loans, the interest rates are lower than unsecured loans like personal loans. But it is always viable to compare and contrast the interest rates of various lenders to ensure that you get the best and the most affordable rate. You can also use the muthoot gold loan emi calculator to get an idea of how much you will need to pay monthly with the interest rate. This will ensure that you keep your finances in check and do not default any repayment.
Another vital thing to check before you fill in the application is whether you are eligible for the loan or not. However, the gold loans’ eligibility criteria are simple, and anyone with gold jewelry can get a loan. It can be housewives, farmers, or salaried professionals.
Many lenders charge processing fees on the gold loan, and it is essential that you are aware of it. There may be costs involved for gold valuation, documentation, renewal fees, and so much more. You should check all the costs before taking a loan to ensure that you don’t pay higher. While comparing interest rates, it is recommended that you compare these costs too.
Gold loans are considered short-term loans, and the tenure usually varies from three to twelve months. However, it also depends on the lender, and you might even get a longer tenure period. Since the tenure is short, it is essential to keep track of your finances and pay the loan back in time to avoid losing your gold.
Determining the Loan Amount:
The lenders evaluate the worth, value, and purity of the gold to determine its market value. Based on this, you usually get 75% of the market value as the loan amount. Therefore, you must know the present rate of gold and your gold’s worth and purity to make sure you are not being cheated.
Therefore, these factors are essential and should be considered before taking a gold loan to guide and help you throughout the process.