A gold loan is a secure type of finance that allows you to avail of funds quickly. However, it is crucial to understand the rates and rules associated with these loans before opting for them.
Most lenders require a valid PAN card or passport for proof of identity. They also check the weight and purity of the gold before disbursing the loan amount.
1. You don’t have to pay any interest
A gold loan is a secured Gold loans Perth, backed by the value of your pledged jewellery. As a result, lenders are usually more flexible with eligibility criteria and have lower interest rates than personal loans. This also makes it possible to take a gold loan even with a low CIBIL score.
However, the type of gold that you choose to pledge can affect your rate. For example, higher-quality gold may lead to a more favourable interest rate as it reflects a stronger repayment capacity. Similarly, your income level can also influence your interest rate. Hence, it’s important to dig deeper and understand the lender’s policies before applying for a gold loan.
2. It’s easy to get
Gold loans are one of the easiest ways to get quick funding when you’re in a financial emergency. However, make sure you take the time to do your research and compare different lenders’ rates before applying for this loan.
A gold loan is a secured loan in which you pledge your jewellery with the lender to avail capital. The lender will appraise your jewellery and provide you with the requisite funds based on its value.
Generally, these loans have lower interest rates than other types of financing. However, it’s important to consider the fact that you’ll be paying back the principal and interest through monthly EMIs.
3. It’s fast
Gold loans are a quick and convenient way to meet urgent financial needs, such as for weddings, children’s education or business expansion. They also have a lower interest rate than personal loans or unsecured debt because the pledged jewellery is used as collateral.
The loan tenure and repayment schedule are flexible. Lenders usually offer a choice to repay the principal and interest in equal instalments (EMIs) or to pay the interest monthly and the principal at the end of the loan term (bullet repayment).
It’s best to compare rates, terms and conditions offered by various lenders before choosing one. Also, make sure you check for charges such as processing fee, documentation fee, appraisal fee, payment default charges and pre-payment charges.
4. It’s flexible
In a gold loan, you can choose to repay only the interest component in equated monthly installments or pay the principal at the end of the tenure. You also have the option to repay both the interest and principal as a lump sum, which is called the bullet payment method.
However, it is important to assess your repayment capability and understand the implications of overborrowing. You should also create a budget that includes your repayment obligation. This will help you ensure that your monthly EMI does not overburden your finances. Your credit history will also play a crucial role in your eligibility for a gold loan.
5. It’s safe
Gold loans are a safe and secure way to meet your immediate financial needs. You only need to pledge your jewellery to a lender, and they will check the purity and value of your collateral before lending you money. They also keep the jewellery they’re holding in a strong vault, and you can rest assured that your asset is safe.
Choosing the right lender is crucial. You should avoid lenders who charge penalties or “hidden” interest rates. It’s also best to compare offers before you sign on the dotted line. Ensure that you’re getting the best deal for your circumstances. Moreover, the loan application process is simple and quick.
6. It’s easy to repay
Many lenders offer periodic EMI options that help you pay the loan amount alongside the interest component. These repayments shops for gold loans are automatically deducted from your account each month. This makes it easy for borrowers to service the loan without incurring any extra charges.
Lenders also offer partial repayments that allow borrowers to make one-time payments during their tenure to reduce the overall interest burden. This method also works well for borrowers who don’t have the income to support paying EMIs each month. Another option is bullet repayment, which allows borrowers to repay the entire principal and interest amounts in one go when their tenure completes.