A gold loan unlike a personal loan has no restriction on the purpose of utilization of funds. For all your financial needs like education, business expansion, personal financial requirements, medical emergencies the best option is to avail gold loan using the idle gold at your home or lockers. As we all know a loan against gold is availed by pledging gold as collateral. But as easy as it sounds, there are some things a lot of people forget while applying for gold loan.
So, in this article, we would tell you about those things which you must keep in mind before choosing the best lender to opt for a gold loan. If you are someone who is facing an urgent need for funds and looking to opt for a gold loan, these factors will guide you to select the best lender according to your requirements.
However, there are a few things to keep in mind while applying for the loan:
- Loan amount
The loan amount that is eventually sanctioned will depend upon the value of the gold. This means the higher the purity of the gold, the higher will be the valuation and loan amount. To be eligible for a loan, the purity of the gold pledged must be 18 to 24k. If you pledge gold jewelry that contains precious or semi-precious stones, or other metals, these elements will be deducted for evaluation. The loan amount you receive will be considered only against the actual gold in the asset.
- Lender credibility
Since you will be pledging your precious gold as collateral, make sure the lender is reliable. Avoid getting a loan from jewellers or small shops, as they could be unregulated and may command unfavourable terms and conditions. There is also the possibility of them being frauds. It is best to opt for a certified financial institution that you can trust.
- Rate of Interest
You must bargain for the best interest rates. Normally, the rate of interest on Gold loans is comparatively lesser than Personal loans since gold loans are secured while personal loans are unsecured. Normally, NBFCs charge a higher rate of interest compared to banks as they have a higher cost of funds. Ideally, if you have an existing relationship with a bank, you can avail gold from the same bank as you can get better terms. The rate of interest varies between 13-15% in most cases. Don’t pledge gold with jewellers as they may not be very trustworthy.
- Repayment structure
There are various options. Gold loans normally have a flexible repayment structure as compared to any other loans. In every bank, the repayment structure of gold loans might differ. In most banks, you can opt for paying just the interest amount through the period, and at the end of the tenure, you can pay the principal amount and take back your gold. This is the preferred model. But some banks also insist that you pay part of your principal each month. This may work out to be more expensive for you. So, it’s important to understand the terms carefully before availing the gold loan. Above all, if you do not repay on time, the bank is entitled to auction the gold after giving due notice. Be cautious of that.
Generally, the tenure of the gold loan is short – ranging from 12 to 48 months. So, it is important to check your repayment capacity before opting for the gold loan from any lender. Because any missing payment will impact your credit score and you may have to pay some extra charges too. So, keep this thing in mind while choosing the tenure and also the repayment method of your gold loan facility.
Things to note
- The majority of lenders charge a minimum transaction fee of Rs 1,000 to 2%.
- If you wish to partly repay your debt ahead of time, it is considered part prepayment.
- If you plan to settle the whole debt balance before time, it is called foreclosure.
- In such cases, banks usually levy prepayment or foreclosure costs, and these can vary from zero to even up to 1%.
Why you should choose Augmont Gold Loan
- Augmont values the requirements and believes in customer service at its prime most objective. So, the Augmont digital ecosystem is built up by understanding the difficulties faced by the customers who wanted to avail gold loans. Hence, Augmont made a solution easier for the customers who are looking to avail the services immediately and within the comfort of their home and time.
- With Augmont, there is no risk of your gold jewellery being stolen, misplaced, or swapped. We are one of India’s most trusted brands. The gold you exchange in return for money will be secured in a vault backed by IDBI Trusteeship Services. Hence you do not need to worry about the safety of your gold. We offer guaranteed safety to your valuable possessions
- Augmont Gold Loan accepts all kinds of gold ornaments from 18 to 22-carat hallmarks. The purity of the gold will determine the amount customers can borrow.
- To avail of an instant Gold Loan from Augmont, we just need your identification proof such as a Driving license, PAN Card, Aadhaar, Voter ID card, Passport, etc., along with your residential proof.
- The process of acquiring a loan from Augmont’s gold loan online service app or website is the easiest and quickest. If the application meets all the requirements and valuation of the gold/jewellery, it takes just a few seconds for the loan amount to be disbursed. The customer need not take effort and waste their time in long queues and complicated documentation process, Augmont’s, state of the art facility ensures the customer enjoys the comfort and convenience of the doorstep facility.
- Augmont charges a nominal processing fee of only Rs.100**. Apart from this, if any other charges are to be levied, they will be shared with the customer at the time of application. Augmont is known for offering loan against gold through a supremely transparent process without any hidden charges.