Things to Consider Before Applying for a Gold Loan

Since decades, gold loans have been in the Indian market, and remains as one of the most popular borrowing options. It is the best option when you need finance immediately, within a short span of time. Also, as gold is an asset backed loan, banks or other lenders do not consider CIBIL or credit score for the approval of a gold loan. This makes it the best choice for those who have a low or no credit score. However, as repaying the gold loan has a few implications on your future finances, you should be careful whenever applying for it.

Here are some important factors to consider when applying for a gold loan:

• The loan amount

As you know a gold loan is secured, the loan amount essentially depends on the valuation of the physical gold you deposit in the form of collateral. As the lenders retain marginal amount, a person does not get the entire gold value as a loan.

• Rate of interest

As you know gold loans are cheaper when compared to personal loans, the interest rates might vary across institutions. Like for example, gold rate in Chennai will be different from the gold rate in Kolkata. Thus, before choosing the lender, make sure to compare the rate of interests offered by various lenders.

• Processing fees

This fee refers to all the expenses incurred by the lenders when they process your gold loan application. It can differ as per the trends prevailing in the market and can change. Few lenders might also charge a flat fee. Make sure that you check this fee amount before initializing or finalizing your loan application. It might be a significant amount, if it is a big-ticket amount.

• Credibility of the gold loan lender

Another important factor is the credibility of the lender who is offering the loan against your gold. Check the lending history of few NFBCs and banks and the authenticity of lender. Ensure that you are quite clear about the mentioned terms and conditions of the agreement offered before actually signing the contract.

• Valuation and purity of gold

The kind and purity of gold pledged is one of the essential factors which determine your loan amount. Generally, any type of gold jewelry can be given as collateral. The lenders access your gold via in house valuation or a third party valuators, in order to decide the total principle amount to sanction.

• Repayment of your gold loan

The most critical aspect of the gold loan is its repayment process. As the gold loan is a secured loan, the gold items you keep or pledge is the security. Therefore, the lender is at minimal or no risk as there is any chances of a default. But applying for a gold loan is a good option if you need instant finance at a very low interest. However, you should go for a instant gold loan on the condition that you can repay the desired sum within the stipulated time frame.

If you are considering of taking a hassle-free online gold loan, Rupeek is the best choice. They even offer free insurance for your gold jewelry.