Gold Loan is a secured loan and it is the best way to avail quick funds against your pledged gold assets. You can get a personal loan against gold, and apply for a business loan against gold & land property. Gold loan interest rates are the lowest in the market.
What is the Gold Loan Process?
When you apply for a gold loan, the lender will evaluate your gold and give you the loan amount based on the current market price.
Types of Gold loans
Gold loan falls under 2 types: Secured and Unsecured.
Secured gold loans are those where you pledge your gold as collateral to get a higher loan amount. These loans are usually lower in interest compared to unsecured ones. The lender will hold on to your pledged gold until you repay it.
Unsecured gold loans are those where you do not have to submit any collateral gold. You can get this kind of loan if you have a good credit score, or through an online platform with their automated risk-based assessment tools. If you are applying for this type of loan, ensure that the rate of interest is not high as it is unsecured.
To get a gold loan, you need to pledge your gold coins or jewellery to the lender and you can take this loan for any purpose like debt consolidation, marriage, travel, or medical emergency. Sometimes, people make mistakes when applying for a gold loan. Below are some of the mistakes that people commit while applying for a gold loan:
Do not force yourself to take a high amount:
The most common mistake that people do is to take a higher amount than they actually require. This is one of the biggest mistakes that people make when they take a Gold Loan. You must evaluate the amount you require and go for just that much loan amount. You should always consider all the aspects such as your income, interest rates, tenor, and credit score when deciding how much you should borrow.
Not choosing the best gold loan lender:
Before applying for a gold loan, you need to be aware of the interest rate and loan amount offered to you. If you are not satisfied with the amount, then you can take your business elsewhere. Many people feel uncomfortable taking this step but it is important for them to know that there are many companies that offer gold loans at competitive rates and it is your right to choose the best gold lender. After all, it is your money and you have all the right to choose where you get the best deal.
Not checking the documents properly:
Many people just sign the documents without even reading them carefully. They end up paying more than they initially thought because of hidden charges. This is why you should always read the documents carefully, ask any questions you have in mind, and only then sign the papers.
Compare Interest Rates And Processing Fees:
Before applying for a gold loan, you must check if the interest rate charged by the lenders is competitive. You must also compare processing fees charged by different lenders. Higher processing fees will increase your cost of borrowing the loan amount. Hence, you must check if the processing fees charged by the lender are on the lower side. Even if you have decided to apply with a particular lender, you should keep other options open until you receive the sanction letter from your preferred lender. This will help you avoid last-minute surprises like high-interest rates or processing fees charged by your preferred lender.
Besides the 5 mistakes listed above, it is also important that you do your research well when looking for alternative sources of funding. There are several options based on your requirements, and jumping at the first one is not always the wisest move. Also, don’t apply for loans from various lenders until you have all the necessary information; be organized, and patient, and apply for a loan that fits your needs well.