Things to Consider Before Taking a Gold Loan

 

Financial emergencies are unforeseen. However, individuals can pledge their idle gold asset to borrow a significant loan amount. However, consider the following factors before applying for a gold loan.

4 Factors to Consider Before Taking a Gold Loan

1. Loan amount or LTV

The maximum amount of loan on gold an individual can receive depends on the LTV. A financier assesses the pledged gold item’s market value to determine the LTV. Moreover, remember to pledge gold items with a purity between 18K to 24K and get a substantial loan amount.

2. Interest rates

Interest rates on gold loans vary with each lender and depend on several factors. A financier assesses an applicant’s credit profile, tenor, loan amount etc. and determines the interest rate. Though interest rates on a gold loan are nominal, individuals must compare multiple lenders offering a low-interest gold loan. 

However, to enjoy the best gold interest rate, maintain a strong repayment history.

3. Processing charges

Check the processing and other additional charges charged by a financial institution. Also, read the internal policies to avoid any hidden charges.

4. Repayment facilities

Selected financial institutions offer convenient repayment options. Repay the loan through regular EMIs. Alternatively, pay the interest upfront and principal later. Or else, pay the interest periodically and principal at the end of a tenor. 

Thus, these are the factors individuals must remember before borrowing a gold loan.