Individuals often pledge their gold assets to obtain a sizeable loan and meet the immediate financial crunch. This holds given the surge seen in the gold loan market. It is expected to grow at an annual rate of 15.7% by 2022. However, applicants must consider a few important factors before applying for a gold loan.
LTV ratio or loan amount
Financiers sanction a
loan against gold after carefully assessing the pledged gold item’s current market value and purity. Accordingly, they determine the LTV ratio. Currently, the RBI caps the LTV ratio at 90%. Hence, borrowers can avail of a high gold loan to cover the financial crunch.
Repayment facility
Unlike other financial products, a gold loan offers multiple repayment facilities to choose from. Borrowers can repay through regular EMIs. Alternatively, individuals can pay the interest periodically and principal at the end of a tenor. Or else, choose to pay interest upfront and principal later.
Interest rates on gold loan
Gold loans are secured loans. Hence, the applicable interest rates are lower compared to unsecured loans. However, interest rates vary with each financial institution. Therefore, it is wise to research and compare multiple lenders to get the best gold loan schemes.
Besides these factors, consider a credible lender that offers simple eligibility and minimal documentation. Keeping these factors in mind is essential so that applicants do not need to face any hassle while applying for a gold loan.
Comments
Post a Comment