Do you need money quickly to pay specific bills or other expenses? Do you have any gold jewelry you might use as collateral for a loan? Then the loan against gold products offered by the top NBFCs of India should be your first and only consideration. This article explains everything from what a gold loan is and what kind of paperwork is required to receive one to how the price of gold influences your loan amount.
- What Is A Gold Loan?
Gold loans are secured loans in which the borrower offers a piece of gold jewelry as collateral in exchange for cash. The amount of the loan is based on the value of the gold that has been pledged as collateral for the loan. The lenders provide loans between Rs. 5,000 and Rs. 2 crores, with the exact amount based on the market value of the gold being pledged. The loan term might be as short as 3 months or as long as 36 months, with several repayment schedules to choose from.
- The Unique Benefits Of A Gold Loan
One of its best features is how simple and quick it is to apply for a gold-backed loan. A gold loan can be obtained even with a low credit rating. In addition, the document required for gold loan is simple and involves just a minimum amount of paperwork to be submitted. Because of its low-interest rates, Bajaj Finance is a popular choice among borrowers who need money quickly.
- Check The Current Market Value Of Your Gold
Every gold loan provider has a team of experts that can evaluate the purity of your gold and provide you with an estimate of its value. You can get a loan for up to 90% of the gold jewelry you pledge as security. The current gold price per gram also significantly impacts establishing how much money can be borrowed. You can find out how much a gram of gold is worth by looking it up online or visiting a nearby jeweler.
- Choose A Loan-to-value Ratio That Fits Your Needs
The loan-to-value (LTV) ratio for gold shows how much you could borrow based on the current market price of the metal. The loan-to-value ratio for a gold loan is typically between 60% and 75%, though this varies widely by lender and market conditions. One of the highest loan amounts in the market is that provided by Bajaj Finance, which is equal to up to 75% of the value of the gold.
Consider your needs and capacity to make loan payments before settling on an LTV ratio. A higher LTV ratio may seem like a good idea, but it could lead to higher EMIs and interest charges, which could be hard to handle over the life of the loan. So, it’s important to choose a loan-to-value ratio that works for you, based on your current financial situation and your ability to pay back the loan.
- Be Mindful Of The Current Gold Price
The size of the loan you are eligible for is directly proportional to the value of your gold. Hence, monitoring gold prices to estimate how much your gold is worth is essential. Online resources such as the website of a gold loan-providing NBFC, various gold price calculators, and market news reports make it easy to track the gold market.
- Benefit From Exclusive Offers:
From time to time, the NBFCs may run special promotions, such as reducing the interest rates or processing costs that customers must pay. The best way to save money on loans is to look for deals like these and take advantage of them when they come along.
- Set up a repayment plan that is convenient for you
Typically, the length of time you have to pay back a gold loan is anywhere from a few months to a few years. It’s important to choose a repayment term that works for you based on your current financial situation and your ability to meet the loan’s terms. Consider that the interest you pay could increase with a longer loan term, while the EMI could increase with a shorter loan term.
Conclusion
Now that you know what is gold loan is, you should think about getting one if you have gold jewelry and need cash quickly. A gold loan NBFC can provide a loan against gold service that is rapid, simple, and offers convenient payback terms.
Don’t forget to factor in the current gold price per gram, how your gold’s worth is assessed, and any necessary paperwork for a gold loan. Ensure your gold is in excellent condition and high purity, and pick a repayment method that works for your budget.
