5 Things You Should Know Before Getting a Gold Loan
September 04, 2021
A Gold Loan can help you tide over any financial worry; however, you should keep certain things in mind before applying for the loan. Read on further, to know more.
These unprecedented times have been tough for each one of us. Several people lost their jobs, leading to financial instability. Moreover, managing mounting expenses, such as school fees, medical expenses, business expenses etc. have left people with no choice but to access their savings or seek financial assistance through valuables, especially gold ornaments. Lenders offer various types of loan to suit this requirement. There are times when a loan may get rejected due to some reason. In such circumstances, when you need funds on an urgent basis, taking a loan by mortgaging your gold jewellery or ornaments with a bank, can be a good option.
For centuries, taking a loan against gold is a common practice in India. Apart from an attractive investment option, it helps you overcome any financial crisis, fund a special event or medical emergency. It has several benefits, such as instant cash, attractive interest rates, and easy retrieval. However, before you avail the loan, you must evaluate certain things. These are:
Rate of Interest: Before you actually go ahead with a Gold Loan, it is recommended that you compare the interest rate offered by various banks. The interest rate on a gold loan is charged differently by different banks. ICICI Bank offers attractive interest rates.
Loan Repayment Options: If you are going through low cash flow, then certain banks like ICICI Bank allow you to avail a Gold Loan without EMI. This facility allows borrowers like you to pay the entire loan amount, including the interest, at the end of the tenure. It is a recommended option if you are confident that your financial status will be stable and you will be able to pay the loan amount, upon maturity. ICICI Bank also offers a monthly servicing product, thus giving you different repayment options.
Tenure of the Loan: A Gold Loan is a short-term borrowing scheme, offering flexibility in tenure, as per customer requirement. The tenure is generally 6 months or 12 months. Depending on the loan amount, you can select the duration of the Gold Loan.
Loan Amount: It is easy to avail a Gold Loan, as it involves minimal documentation. As opposed to other loans where an income proof or your credit history plays a big role in determining the loan amount, a Gold Loan is an exception. To be eligible for a higher loan amount, banks evaluate the purity, net weight, and value of the gold.
Trustworthiness of the Lender: If you are keen on applying for a Gold Loan, then you must avoid approaching any jewellery shop owner, owing to the fact that the interest they charge is high, plus there is no guarantee that your gold will remain safe or the valuation of your gold will be correct. Always apply with a bank because your gold remains protected against any external threats; moreover, you avail the loan amount based on the valuation of the gold you mortgage with a lender.
It is also easy to apply from the comfort of your home by just giving a missed call on 84448 84448 or by visiting the nearest ICICI Bank Branch, if you choose ICICI Bank as your preferred bank.