Getting a gold loan is a great option these days. But before you decide to get one, there are some things that you should keep in mind. This blog will look at some of those things and want you to be aware of. But, there are a few things to bear in mind when applying for a loan:

1.) The gold’s value determines the amount of the loan

The amount of loan eventually approved will be contingent on the gold’s worth. That means that the greater the purity of the gold, the more valuable its value and the amount of the loan will be.

Suppose you are pledging gold jewellery containing valuable or semi-precious stones or other metals. In that case, these elements will be removed for assessment. The amount you are granted is only compared to the actual gold present in the asset.

2.) Make sure it’s a reputable lender

As you will be using your precious gold as collateral, you must make sure the lender you choose is reliable. Please do not take a loan from small shops or jewellers because they are not regulated and could have unfavourable terms of their contracts. There is also the chance of fraud.

Therefore, it is best to look for a certified financial institution that you can be confident in. For example, with Basant Finance your gold is insured and kept with full security and is stored in our fire and burglary proof vaults.

3.) Examine the options for repaying

Another factor to consider is the option to repay, which is why there are several options you can think about:

Bullet payment: In this case, the loan amount is calculated following normal rules for monthly repayments, but you have to pay the full amount, including the interest, after your loan. This is a good option when cash flow is low initially, but you’re certain that things will improve and will be in line with the conclusion of the loan term.

In this case, you are able to pay the full interest at the start of the tenure and the principal at the conclusion.

Regular EMI: The regular EMI gives you the option of repaying your loan monthly basis, along with interest. This is ideal for salaried people who can be sure to receive monthly payments.

Overdraft facility: Here an overdraft facility is offered against gold to the borrowers. The borrower is required to pay only the interest on the amount that is used. This is a great option for salaried and self-employed individuals.

Factors to be considered prior to make an application for the gold loan

Most people living in India have gold jewellery inside their homes or bank lockers. It has always been viewed as an investment option in India. It is bought in celebration of certain occasions or as an offering for events ranging from the birth of children to birthdays, and it is often associated with weddings.

Gold is a valuable metal that can hold its value over time regardless of periods of highs and lows due to political or economic factors. Therefore, it is still a popular choice and appeals to most Indian families. This is why it’s a given that each household has a stash of gold to draw on in difficult times if they decide.

It doesn’t matter if the goal is to raise funds to construct an apartment, finance education for a child’s future or even medical emergency costs. Gold is always an option to draw on. So it is during such times, people opt to get a gold loan.

The process of obtaining a gold loan may appear straightforward initially. You may think that all you need to do is visit an established gold lender’s showroom and sign a pledge of your gold for a significant amount of cash. But did you realize there are some things you must be aware of before deciding to make an application for a gold loan? Being aware of this before applying will allow you to increase the value you can earn from your gold, but make sure it’s secured and that you’ll be able to pay back the loan and receive the gold you have purchased.