Mistakes to Avoid While Applying for a Gold Loan
In today’s period, it is said that a GOLD LOAN is the most successful loan in the eyes of the Indian population. The demand for gold in India has increased by 804%. In our country, we use gold for jewelry and articles. It also has many corporate uses, one of which is using gold loans, which is the easiest solution to get easy finance in India. It is a secured loan taken out against one’s gold holdings. It has no restrictions. You can use this loan for various events like education, marriage, going abroad, or any project you are working on. A gold loan is offered by most banks, such as Muthoot Finance, SBI, ICICI, and others. More than half of the families in our country have benefited from this secured gold loan.
Gold Loan Interest Rate
The goal of gold loans is to meet your financial needs whenever they arise. Gold loan interest rate is charged by the banks on the loan taken. The gold collateral is given back to its owner after he/she pays back the loan with interest on it. The gold loan interest rate ranges from 7% and onwards. The bank provides hassle-free submission of legal forms and documents for the process of a gold loan. All you have to do is make sure you repay the loan amount plus interest on time and without fraud.
You can use the online calculators that different banks offer to figure out your EMI and find the best plan for you. These online calculators are free. Hence, you can use it for free as many times as you want. You have to be aware of certain factors that can affect your gold loan interest rates.
Steady income: A person with a low income is majorly affected by the banks, as they charge high-interest rates for low incomes that are not on continuous terms. Gold loans for a person with a low and slow income cannot be extended. Banks prefer to extend credit only to people with high incomes.
Purity of gold: The banks always question your collateral gold. The authorized person will make sure that your gold is of sufficient weight and that the gold is pure. It can affect your gold loan interest rate.
Avoid These Mistakes While Applying for a Gold Loan
More than half of people don’t know the correct area to focus on while applying for the easy-to-acquire gold loan. Everyone makes these tiny mistakes while choosing their suitable gold loan interest rate from different banks. Let us look at some of the small but significant mistakes that people make when selecting banks or loan plans.
1. Check your bank or institution
When you lend the gold as collateral security, make sure that your bank or any institution that is lending you the loan is not fraudulent and can give your gold or gold articles back safely. These frauds are frequently reported by loan recipients. The best solution for this situation is to take a gold loan from government banks or NBFCs, they deal at the nominal gold loan interest rate.
2. Understand loan repayment building
To achieve your goals easily, you should plan your finances first. You should understand the loan repayment terms from the bank. It will help you plan your finances and achieve your goals.
3. Calculate your LTV-LOAN TO VALUE ratio
Your LTV amount should be the lowest. The bank uses this ratio to calculate the amount of loan you get.
4. Hidden charges
Before applying, kindly read the privacy policy or the terms and conditions of the bank or institution from which you are taking the loan, as it might have charges relating to penalty, auditing, or other legal charges that are not shared at the time of agreement by the banks or institutions. It might create problems for you after.
5. Do a purity check
Check your gold’s purity. Many banks lend loans according to the purity of the gold. The gold loan interest rate varies according to purity. Note that the Banks or institutions give gold loans on purity ranging from 18 to 22 carats.
6. Connect with hassle-free institutions
Verify the process of the gold loan from various banks and choose the one that is easy to apply for and submit documents to. It gives you relief in your daily activities.
7. Choose your bank or institution wisely
If you want to be at ease after applying for a gold loan, you must select the bank or institution that provides the best support or customer service. It will help with your problems paying the interest on your gold loan.
8. Save your interest with different schemes
There are various schemes offered by banks. Connect through the authorized person and commute. You can go for partial repayment. It means you can pay your interest and principal amount partially or as they feel suitable.
EMI method: In this method, you will only pay your gold loan interest amount to the bank as per your EMI period. On maturity, you will be required to pay the principal amount of your gold loan.
Check to See If You Are Eligible for a Gold Loan
You should meet the following criteria to apply for the gold loan at an affordable gold loan interest rate:
- You should have the appropriate amount of gold that is acceptable to the bank or institution.
- Your gold should be attested with a proper hallmark.
- The minimum age requirement to apply for a gold loan is considered 18 years old and above.
Conclusion
The buyer should be aware of the mistakes and the solutions listed above. Make proper use of online platforms to learn about your LTV ratios and calculators. Have proper credit evaluation tools to find the right interest rate for your gold loan. Explore more finance articles on Piramal Finance and enhance your financial wisdom.