Things to consider while applying for a gold loan in Chennai

Take out a gold loan from a bank or non-bank financial institution to ensure that you get your asset safely home after repayment. Chennai is not like any other place, it has something unique that keeps their people bonding strong there are a few things you should be better known of before applying for a gold loan in Chennai. This will make sure that you get the most out of your gold loan while also being able to repay it on time.

Gold is an important component of India’s investment portfolio. Gold is also associated with a lot of social significance—it is purchased during certain festivals, given as a gift, and is, of course, an important part of weddings.

Most of us have some gold in our possession, and we can rely on it in difficult times. These could be used for unexpected medical expenses, home repairs, and so on. A gold loan might be able to help in such a situation. Gold loans have become popular as a result of the financial chaos caused by the pandemic.

However, there are a few things you should know before applying for a gold loan, just as there are for any other loan. This will guarantee that you get the most out of your gold loan while also being able to repay it on time.

Obtain a loan from a bank or a non-bank financial institution (NBFC).

Small-time jewelers, as well as lenders, are among the informal sources that offer gold loans in the markets, but you should always choose a bank or a non-banking financial company (NBFC) because they are safer options. Remember that a gold loan is a secured loan, which means you must put your asset up as collateral with the lender.

-Because both banks & NBFCs offer gold loans, it’s dangerous to compare their rates, eligibility requirements, as well as loan amounts. -Most banks, for example, charge a valuation as well as a processing fee of 1-2 percent of the loan amount, whereas, head of research at Rupeek.com Gold For All, an integrated gold company with refining, manufacturing, as well as retailing operations.

Take a look at the price of gold.

The amount of the loan will be determined by the value of gold. As a result, the purer the gold, the higher the valuation as well as the loan amount. In fact, the gold must be 18 or 24 carats in order to qualify for a loan. In addition, if you want to take out a loan against gold jewelry that is set with stones, the value of the jewelry will be deducted. For the purposes of the loan, only the current gold price will be taken into account.

A gold loan is secured, so the loan sum is determined by the value of the gold you put up as collateral. At the moment, NBFCs can only lend up to 60% LTV (loan to value), whereas banks can lend up to 75% LTV. A 60% LTV means that if your gold is worth Rs 1 lakh, you can get a loan for Rs 60,000.

Interest Rates: A Comparison

The lender’s risk assessment of the borrower determines the interest rate on a gold loan. It can be anywhere between 75 and 25 percent per year. Lenders determine the interest rate on gold loans based on the loan-to-value ratio, loan tenure, loan amount, and other factors.

Compare rates from various lenders to find the best deal. Some non-bank financial institutions specialize in gold loans & offer lower interest rates and better terms and conditions. Keep in mind that there may be additional charges such as processing fees.

Choose a tenure that you are happy with.

Short-term loans with reimbursement terms varying from seven days to three years and options of repayment are known as gold loans. Choose a term that is comfortable for you in terms of cash flow as well as other expenses. Typically, the longer the term, the lower the equated monthly installments. Keep in mind, however, that a longer tenure also means more responsibility.

Examine Your Repayment Options

Borrowers have a variety of options for repaying gold loans, including regular EMIs, bullet payments, as well as partial payments.

The repayment schedule for a bullet loan is monthly, but you can pay off the entire loan at any time. If you expect your finances to improve around the time you need to repay, this may be a viable option.

Taking out a gold loan is considered a social stigma in India because it indicates extreme financial distress and is one of the last options for raising funds. In recent years, many NBFCs, as well as banks, have started offering doorstep gold loans, in which gold is inspected & valued at the borrower’s home as well as disbursed within a few hours.