Are you looking for ways to get out of debt? Consider taking a gold loan. These loans are more than just an easy way to borrow money, they can be a smart investment in your future. There are many things that make gold loans so beneficial: not only do they offer low-interest rates and flexible repayment terms. Gold loans are a perfect option for borrowers who need to take out a short-term loan. However, it’s important to know how the process works and what you can do to make sure you get the best terms possible. In this blog post, we’ll cover some of the most important tips for taking gold loans. Read on!
- Choose a lender which offers you attractive interest rates: Gold loan interest rates are set by the lender but the gold rate depends on market conditions: One of the biggest benefits of taking out a gold loan is that the interest rate is set by the lender. In comparison to other forms of personal loans such as credit cards and payday loans, gold loans tend to have relatively low-interest rates. However, the gold rate per gram is dynamic and changes every day depending on the market conditions. So ensure that you find a lender which offers the best interest rates depending upon the market rate.
- Ensure that the lender is trustworthy and your gold is safe: Precious metals are valuable and need to be secured: The general status of gold is that it is durable, precious and rare. However in the event that you are not able to repay your loan on time and your property gets confiscated by the lender, what would happen to your gold? You would want your gold to be as safe and secure as possible till its time for you to take it home. In most cases, they do offer some additional insurance against theft or damage but also ensure that the lender has a proper storage system in place for your own peace of mind.
- Determine the cost of your loan pre-emptively (get a quote): If you are planning to take a gold loan, then it is prudent to know what interest rate you will be paying for. To find out if indeed this is competitive, you would want to get an estimate of how much money can be borrowed prior to taking up the loan. The best way to do this is by getting quotes from at least 5 different lenders who offer gold loans. Use the gold loan EMI calculator to get a comprehensive idea. This will give you an idea of rates available as well as the terms and conditions attached in relation to the loan amount.
- Wait for market rate to go up: As per RBI’s guidelines, you can avail only 75% of the value of the gold, evaluated on the current gold rate per gram. So it is important to study the trend of the gold rate before taking a gold loan. Ideally, you should wait for the market rate to go up. There are certain loan companies that would offer good rates only when the demand is higher i.e during the festive season or while there is a hike in the price of gold per gram over the usual. So if possible, it is advisable to wait till these time periods as most loan providers will try to beat their competitors by offering better terms and coupon rates.
- Read the terms of the gold loan carefully: This is something that most of us ignore. You should go through the fine prints as the terms can vary a lot among different gold finance providers. Some gold loan companies would ask for extra collateral etc and others may insist on getting a co-borrower which means that they will get another person to sign on the dotted line with you, besides asking for a guarantee from someone else.
It is best to take Gold Loans from trusted lenders with a name in the market. When you borrow from an unregistered P2P lender, chances are very high that he could disappear once he has got the gold in his hands. So, it is important to always ensure that the lender is registered.