Gold loans can help to decrease financial problems, but, you need to keep certain points in mind before applying for a gold loan. As you know, tough times like Covid-19 were hard for each of us. Various people lost their lives, and jobs leading to financial concerns. In addition, managing expenses like medical, business expenses, school fees, EMIs, etc have left people with minimal choices like accessing their savings or seeking financial help through valuables, one of them being gold ornaments. Various companies like Kings Pawn offer types of loan services to meet people's financial needs.
There is also a time when people's requests for a loan get rejected due to some reasons. In such cases, they are left with fewer options, for instance, taking loans by mortgaging their gold jewelry with banks or trusted lenders that are good options to consider. For several years, taking loans against gold has been common in various countries. Regardless of an attractive investment option, it will help you to overcome financial crises.
But, before availing a loan, you must consider the 5 following points listed below regarding gold loans from precious metals lenders.
1. Rate Of Interest
The rate of interest is one of the critical factors to consider when applying for gold loans as it is your repayment amount. As it is a secured loan, the rate of interest is lesser than the unsecured loan such as a personal loan. Moreover, the rate of interest varied from lender to lender relying on the gold purity and other such factors at the time of getting the loan. This also ranges from 7% p.a to 18% p.a. Hence, it is advisable to check the interest rate of different vendors.
2. Repay Options
The other factor that needs to be considered when buying an auto gold loan is the repayment option. A lender offers different types of repayment options such as equated monthly installments or EMI. The other option is to choose the paid interest during the loan tenure and completely pay the full (principal amount) in one go.
3. Lender Credibility
As there are numerous lenders who offer gold loans, choosing the right one may be a daunting task. So before applying for a gold loan, you need to ensure lender credibility as you will be offering your precious money to them. Various lenders provide loans at better offers, however, it is advisable to avoid taking a gold loan from the untrusted lenders. There have been numerous instances of fraud involving such untrusted lenders, where the borrowers did not receive the pledged gold despite making full repayment.
4. Non-Payment
One of the important factors to keep in mind before buying any gold loan is what happens in the event that you are unable to make the required payments on time. In such situations, the lender may put your gold up for auction. In addition, the lender may require you to deposit more gold if the price of gold declines due to the market conditions.
5. Schedule Of Payment
Generally, the gold loan takes short term repayment schedules ranging from weeks to a couple of years. When opting for a gold loan, always pick a repayment plan with which you are more comfortable. When selecting a tenure, take your general expenses and other financial flows into account.
A Golden Opportunity
A gold loan is an ideal option to fulfill short-term money needs. With numerous options, it makes one of the best choices for any person. However, when pledging your gold, you should make sure you are able to repay the loan in a timely manner. If you are not able to pay the loan on time, this may not impact your credit score but also make you lose precious golf because lenders have the legal right to sell the gold in order to recoup their losses in the event of non-payment.
