Things to Do Before Applying for a Gold Loan

Gold loan is one of the most popular borrowing options, especially for those in immediate need of cash within a short time period. It is a secured loan solution where the borrower submits their gold articles to the lender as security in order to get the loan amount. In return, the lender charges a specific interest rate, and when borrowers repay the loan amount, the lender returns the gold articles. Since it is an asset-backed loan, banks and private financial institutions do not ask for a credit score for approving the loan. However, there are some things you have to do to ensure getting the maximum out of your gold loan. Here are some important things you need to do before applying for a gold loan. 



Check Lender’s Credibility

Remember, your gold items as security remain with the lender or company till the loan amount is completely paid off. So, when applying for a gold loan, you must research the reliability and status of the lender. Apply for a loan from only a trusted lender who will take care of your valuables gold until loan repayment. For borrowers, the best way to ensure the safety of their gold is to choose reliable banks and NBFCs.  Customer reviews and testimonials can help you make a well-informed decision.

Consider the Processing Fee

The processing fee is the cost charged to the lenders while processing your loan application. The charges can be between zero and 2% of the loan amount. Also, some financial companies charge flat and fixed fees from the borrowers. So, before you apply for a gold loan, check this fee, as it can be a significant amount.

Check Repayment Options

A gold loan comes with diverse repayment options, such as regular Equated Monthly Instalments (EMI), Bullet payments and Interest now - principal later, etc. Remember, late payment can cost you more as you will be required to pay a certain amount as a penalty. So, you must check the repayment options and tenure before applying for a gold loan from a specific bank or company. 

In addition, you should check the current or today’s gold price and compare the loan offers of diverse companies to make a better decision.



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