You might be earning a high income, but with the high prices seen today everywhere, it is impossible to save a good amount of money in a year. In such situations, taking a loan to meet financial needs is better than paying a huge amount right away. There are various types of loans available through which immediate expenses can be met. Out of them, an important one is a gold loan.
About Gold Loan
Many people opt for a gold loan because it offers so many benefits, the primary one being that loan amount is sent to your account quickly. It does not take much time to process the application, and very little documentation is needed. As the interest rate is low, you can repay the amount within a short period.
Furthermore, the loan amount can be availed on the value of the gold which you own. You need to pledge only that amount which you feel is necessary to avail loan. A key point to note is that the gold loan interest rate is very low. When you compare it with the amount that has to be paid as interest on the loans, this one is very affordable.
If you expect good earnings within the next one year, it is possible to settle the loan faster, instead of waiting for a period of three years to pay the bank back, repay the amount sooner so that you can be free of it, and can concentrate on other expenses that you have to meet. Those seeking specifically for a low-interest loan, which they are able to repay quickly, will find this loan type to be just what they need.
Important Points to Note Before Taking Gold Loan
Before you take any gold assets to the bank or lender for pledging, it is important to check if it is 18-carat and above. Gold that has a mark below this is not accepted. Furthermore, you will be able to get more money for 22K and 24K gold than 18K. The lender will give you 75% to 80% of the ascertained value of the gold in the form of loan and not the full amount. So, if you are pledging gold that is of five lakhs in value, you will be to get something like four lakhs and twenty-five thousand as loan amount and not the entire five lakhs amount. Hence, decide on what amount of gold you want to pledge and be realistic about the money that can be gained in the form of a loan before getting into it, and the most important thing to check is gold loan interest rate because it will decide how you repay EMI.
You can pledge gold coins and jewellery to take a loan. It is to be noted that before applying for a loan, check if you will be able to repay it back properly. Gold is a valuable asset, something that you would have gained from monthly salary or from grandparents, or else during your wedding, so when it is pledged for a loan, look into your capacity to repay, so that you do not lose it. Only opt for loan amount for which monthly repayment is within your capacity.