Consider The Following Point To Avoid Any Mistake At The Time Of Gold Loan

Since gold loans are easier to acquire and their processing time is quick, many people opt to get instant funds without any trouble. There is also no need for specific documentation apart from a few KYC documents to complete the application. The banks and NBFCs don't even ask for the credit score to check your eligibility. With so many privileges of availing a gold loan, it is understandable that people are more inclined to take a gold loan than a personal loan. But due to the lack of proper proofs and credibility, people can make mistakes and be careless while taking such loans, so it is advisable to move ahead with appropriate care and caution.

BOB Gold loan is offered at low-interest rates of 8.50% onwards; both got new and existing customers. The loan tenure for the Bank of Baroda Gold Loan is between 6 months and 12 months. Here are a few mistakes that need to be dodged to get the full benefits of a Bank of Baroda gold loan:

Not comparing and evaluating interest rates:

Depending on the type of lender, gold loan interest rates can range from as low as 7.50% to as high as 29%. The public sector banks provide the least interest rates (8%-15%), followed by private sector banks (10%-18%), and the NBFCs have the highest interest rates (14%-29%). Since the NBFCs provide various perks like small loan amounts and longer loan tenure to their customers and offer better service, their interest rates are higher. It is better to use the Gold Loan Calculator provided by various banks to calculate the most affordable EMIs by entering the gold loan interest rate, loan amount and loan tenure.

Forgetting the Processing fee:

It is always better to check with the lender beforehand about any additional charges and hidden penalties for the loan agreement. Many banks waive the processing fee but can charge based on the loan amount. It is usually 1%-2% of the overall loan amount but may seem high for loans against the gold of large amounts.

I am not verifying the lender's credibility:

Throughout the tenure of the loan, until you repay the whole amount, the pledged gold is technically the property of the lending party. If you cannot refund the loan amount before the tenure ends, then the lender has the right to use that gold to compensate for the outstanding loan amount.

This is a genuine deal and comes under the law as well. But what if the lender isn't trustworthy and turns out to be a con? So it is advisable to go for gold loans with only the well-established and well-known banks and NBFCs so that your gold is safe till the gold loan tenure ends. These reputed lenders even provide maximum security to keep your gold safe and avoid any chances of theft.

Ignoring the LTV ratio:

Creditors use the Loan to Value ratio to determine the percentage of the loan amount to the overall market value of the gold deposited. You cannot get the same amount for a loan as the market value of the gold ornaments. This value is around 80% of the gold's value, and to avail better interest rate, this ratio should be higher.

Summing Up:

Gold Rate Today has been seeing some momentum since the beginning of the year. This is because equity markets got hammered toward the beginning of the year, which pushed financial backers to put resources into a place of refuge assets like gold. The valuable metal may not be a top pick over the most recent couple of years, as prices have moved in a tight reach. Towards the beginning of the year, a fall in equity prices considered some to be too gold as a venture.

Gold loans outperform the other loan options due to their unique features like quick disbursal and no eligibility criteria. Since it does not expect the borrowers to have a good credit score, it is a viable option for those with a low credit score. It is an excellent option for salaried, self-employed individuals as well as farmers and homemakers.