It is estimated that Indian households have piled up about 24000 to 25000 tons of gold in the form of ornaments and jewellery. The value of these holdings is huge. But many people adopt the general practice of storing or keeping their gold directly in their bank lockers or even at home. It is not the best utilization of the valuable ornaments that they have. In the the time of need you can get cash for gold easily by using your gold as collateral for a gold loan. It is a safe and quick way to avail loans on a lower interest rate. Many individuals adopt gold finance to meet their temporary money requirements.
Benefits of Gold Loan
Cash for gold is gaining popularity with every passing day as it gives the borrower a higher principal amount. It is because, in other loans, the principal is affected by the borrower’s income. In the case of gold loans, the principal only depends on the quality and quantity of the gold placed as collateral. Also, many lenders do not charge a processing fee, disbursement is quicker and there are zero prepayment charges. Additionally, interest rates are generally lower for gold loans as the borrower places collateral with the lender, which acts as a guarantee that the borrower will pay the loan back.
Guide to Getting Gold Loan:
Know the value of your Gold:
One of the most important aspects to keep in mind when applying for a gold loan is understanding the worth of the gold ornaments that you own. If you know the value of your gold, then you can quote an approximate amount of your gold before applying for the gold loan. If you have an electronic weighing machine at home, you can use it to evaluate the quantum of gold that you own. Or you could also get it weighed at the lender’s outlet or by a credible jeweller. It will also help you determine the quality of the gold that you own so that you can get maximum cash for the gold that you will place as collateral.
Do thorough research:
If you are applying for a loan or trying to buy something, it is a good idea to go through an in-depth analysis of your target’s outcome. Similarly, when applying for a gold loan, it’s essential to get informed about critical words like LTV, Per Gram Cost, etc. Knowledge of these gives you an upper hand when negotiating terms with various lenders. The LTV or Loan to Value Ratio is the primary basis on which you decide the amount of money lent to you on the day of the loan application. The Reserve Bank of India has set the highest standard use of gold LTV at 75%.
Specifications are different for different lenders, but many top lenders like Muthoot Gold Loan ask for very few but important documents to approve a gold loan. When you decide to visit one of their branches to apply for a gold loan, just the Identification papers are enough. There is no need for a guarantor as well.
Finalising a Lender:
By now, you should be close to finalising your lender. Try to find an option which would enable you to repay the loan amount conveniently. To receive any input about the lenders, you can seek help, online or offline. Evaluate the interest rate quoted by the lenders and scan for any prepayment fees or other such unnecessary fees that may eventually boost your final cost.
Calculating Gold Loan Amount
The gold loan amount is dependent on factors such as the purity of the piece, its weight and the market standard per gram rate. Once the calculation of the loan amount is done, the amount loaned will be decided after Loan to Value Ratio has been implied to the calculated amount. This will be the Net Gold Amount.
Gold loans are secured loans requiring reduced paperwork and no need for credit score approval, either. It can be used at reduced billing and mortgage costs with a hassle-free extension of the repayment period. It is a very simple and reliable way to get loans and fulfill your financial needs by getting cash for gold, because of the ample benefits.