The safest ways to availing a gold loan


It is hassle-free, convenient, profitable, financial help, and a save, but just because it is all those things, you shouldn’t write your gold off just yet. As much as the loan profits the loanee, it does the loaner too. In exchange for the amount, banks charge interest rates, and this interest rate more often than not is in favour of the banker than the customer. Gold loan interest rate varies from bank to bank and bank-to-NBFC, some charge more, a few less it differs and the clever way in managing a loan, availing a god loan and paying it off all depends on the lender, scheme, interest and tenure the applicant chooses.

Loan-to-value ratio: it is a financial term used by lenders to demonstrate the ratio between the principal offered and the asset's value. The ratio is profitable if it is high. The more the percentage, the higher the gain to the applicant. Most banks offer 90% of the gold’s value, but if the lender doesn’t provide less than that, it is better to change the lender.

Collateral: The gold article is the collateral, and making sure it’s in the safest hands is a massive part of availing a safe loan. So choosing the lender comes first. The banks or financial institutions should be legitimate business. You can trust and have your full satisfaction. If the bank or financial institute is multinational, it is even better in choosing as that indicates their ratings and the number of account holders.

Tenure: Banks and financial institutions have a specific time period allocated to the particular loan. For a gold loan, the minimum is six months to 48 months, and the most common tenure is 24 months which most banks and NBFCs offer, and the loanee can choose a time period between the minimum and maximum for the loan. It is in general preferable to choose s short tenure, as the amount of time you have to pay interest reduces, thereby reducing the total charge.

Interest rate: The rate of interest offered by most banks and NBFCs lies in the range of 7.5%-14%. Anything more than that is unsafe and not recommended to take out the loan. The gold loan interest rate can be calculated on the official websites of almost all banks and financial institutes. Muthoot Finance gold loan offers a minimum interest rate of 11.25% p.a with a minimum loan amount of Rs1500 to the maximum is unlimited. Going for the best interest rate of the loan is the essential part of availing it, as you will be paying the Equated Monthly Instalments(EMIs) regularly until the end of your tenure.

And finally, the mode you are opting to avail the loan is a primary concern. In this era, in 2021, everything can be bought and sold by merely pressing few buttons and availing a loan is indifferent from them. Legit banks and NBFCs have online and offline modes in offering gold loans. If the online mode has opted, you can submit your application and documents online, and the bank will just send an official to pick your asset, and that is all there is to it. If the conventional way has opted, the applicant has to meet the bank or NBFC to avail the loan and sign forms and take copies. Most people even now choose this, but one has to be careful as there might be a mediator or an agent involved in making transactions and helping the process. Sometimes they are useful, but mostly they commission the applicant and might always not be favourable o the loanee.