Is it Safe for me When we Avail of the Gold Loan?

Yes, it is safe to go with a gold loan but there are a few things to bear in mind if you're in desperate need of cash and considering taking out a gold loan.

The credibility of the Lender-

A gold loan can be described in two ways: given and taken. You make money by giving gold. You must apply your gold as collateral or insurance to the lender if asked by a bank or NBFC. When the loan is repaid in full, the lender will automatically release your gold. If there is a scam and the lender refuses to refund your gold despite the fact that you have paid the loan in full payment.

To safeguard yourself against such situations and fraud, the alternative you choose must be well-known and have a good market position. If you take a loan from an unregulated source, there's a risk you'll be misled and lose your gold.

a) Loan Amount-

When applying for a gold loan, the loan amount is most important. There are numerous banks that sell gold, as well as numerous non-bank financial institutions (NBFIs) that specialize in gold loans. You should be mindful that no lender can lend you 100% of the value of your gold. The average loan amount is based on the total value of your gold and ranges from 65 percent to 85 percent. For example, bank, under Axis Bank gold loan per gram you can simply get the 90% of the value of your gold submitted i.e 90k on one 1 lakh. So, if your gold is worth 1 lakh, the maximum sum lent by financial institutions would be 85k based on the total value of your gold. As a consequence, it's easier to choose from a range of choices that will give you the most money for your gold. 

b) Rate of Interest-

You decide to get the best price on the goods you are buying because you are an intelligent buyer. For gold loans, the principle is the same. The amount of gold you have to put up as collateral determines your gold loan eligibility. As a result, always choose an option that will lend you more money at a lower interest rate. So look for a lender that is a good fit for you so you don't have to pay a higher loan rate. Gold rate is an essential factor. So wherever you live, you should be aware of the gold rate today .  For e.g if you live in Chennai you must be aware of the Gold Rate in Chennai. 

c) Repayment method-

A person's decision to take out a gold loan is influenced by a number of factors. In contrast to other types of loans, a gold loan provides more flexibility in terms of repayment and payment methods. As a borrower, it is your responsibility to examine the repayment options provided by a specific source for your gold loans. There are several options for repayment, including monthly, quarterly, semi-annually, or yearly payments, with the remainder of the principal due at the end of the term. As a result, paying a portion of the principal and interest each month is the easiest way to repay. Some lenders also offer a bullet repayment option, in which you pay both the interest and the principal at the end of the term.

d) Tenure-

Before taking out a gold loan from any lender, make sure you know how much you can afford to repay. Taking out a gold loan usually has a short term, ranging from 12 to 48 months. If you try to miss payments, it will have a negative effect on your credit score and you could be assessed a penalty.

CONCLUSION- 

Holding these points in mind will assist you in making an appropriate decision based on your capabilities. Examine the clauses of various financial firms and learn more about how they can shield you from a number of scams and misunderstandings.