Insights of Gold Loan

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The gold loan can be sought from a lending bank, financial institutions or NBFCS by keeping one's gold possession mortgage. The borrower has to give consent to repay the debt in a given term, and if fails to do the amount will be recovered by liquidating or auctioning the gold.

Gold trading:

This is a thing that has been carried around globally since medieval times. Earlier there didn't used to be banks or financial institutions. Trading used to be carried out between traders and goldsmiths. Goldsmiths used to lend money to people by keeping gold as collateral. Gold was asked as collateral as a safety towards the loan.

On what ornaments Gold loan can be sanctioned?

A loan can be acquired on any valuable weighing above 18 carats. There is no barrier that only new jewellery or ancient jewellery can be kept as a mortgage. The gold possession should be in good form and are analysed before loan approval. Purity testing of gold is conducted on bank premises to evaluate its composition and the impurities involved.

Gold loan repayment Schemes and options:

Repayment schemes such as bullet repayments, overdraft repayment schemes and Equated monthly instalments are given to the borrower for debt consolidation.

Bullet repayments- the borrower has to pay back a sum of interest rates monthly, and the principal amount of the loan is due at the end of the term.

Overdraft repayment facility- the sum of money has to be paid monthly with incurred interest rates only on the amount disbursed by the borrower.

EMI option- Equated monthly instalments or EMI are the most convenient option where an indicated amount is deducted from the borrower's bank account monthly, including interest rates. This is the constant amount charged upto the end of tenure, and more or less than the indicated amount can't be repaid as an instalment.

How to choose a tenure period for a gold loan:

After getting the loan approval, you have to choose the loan tenure as per your repayment ability. Using an EMI calculator can help you devised a sufficient estimation of the amount which had to be repaid over time. The less the term of the loan, less interest will be charged and vice versa.

Role of eligibility parameters in Gold Loan:

There are specific parameters set up by the lending Bank which offers banks to banks. One has to abide by it to be eligible for applying for a loan. Using an eligibility calculator of IIFL bank can help one in determining the eligibility. Age, citizenship, income and credit history are the standard eligibility parameters.

How is the interest rate calculated in Gold Loan?

An individual’s credit history examination decides the interest. A credit score is a report with all the information relating to the borrower about his/her debt records, income, repayment of the debt. This is very important in loan approval for the borrower to have a good CIBIL Score. The CIBIL Score good will be fewer interest rates incurred, and high interest will be incurred with poor credit history and low CIBIL score. In case of loan defaults, IIFL Gold Loan approval is quite complicated and usually, a high-interest rate incurred loan is sanctioned.

What are prepayment options?

These are payment options where one had to pay an amount prior to the repayment period. The interest is only imposed on the outstanding amount, which must be paid during the payback period. A loan's tenure can be shortened because of this option. No additional charges are incurred for availing of this option.

Is CIBIL Score important in availing a Gold Loan?

A CIBIL Score is a score ranging from 100 to 9000 devised by an RBI approved organisation based on one's past debt, income and loan defaults, if any. This score is valid for ten years, and debt repayment has a direct impact on this score. Every bank and firm requests this score before sanctioning a loan. One must ensure a good CIBIL score before availing a loan. In Gold Loan, it is usually not mandated to have a good credit history, but still, getting less incurred Interest rate is very beneficial.

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