Tips for Getting the Best Gold Loan Deals

A loan against gold is a quick, hassle-free and convenient alternative to acquiring quick funds. It offers several benefits to borrowers, including quick processing and immediate capital disbursement, no end-use restrictions, higher LTV and competitive rates.  

However, there’s much that goes into acquiring a gold loan. For example, the terms of the acquisition, the lender's application criteria, current gold rates, the applicable gold loan on EMI etc., should be considered beforehand. 

Compare Different Terms

Every lender employs different terms and conditions for gold loans. Much like any other loan, it is important to do extensive research and compare terms offered by different lenders. Financially, it is crucial to choose a reputable lender as their terms can significantly influence your borrowing experience. While some may offer preferential interest rates, others may have more relaxed repayment terms. It is important to ensure these terms are consistent with your financial capabilities.

Maintain a Good Credit Score

Even though gold loans are secured against valuable collateral, and lenders may have lenient eligibility requirements, it is still good to maintain a good credit score. Credit score acts as a mirror of one’s financial health and significantly impacts future borrowing capacity. Lenders are more inclined towards offering loans at better terms to individuals who are responsible with their credit score as it reduces their risk of lending. 

Keep an Eye on Current Gold Rates

Before approaching a gold loan facility, it is essential to analyse the current market conditions and the ongoing gold rates. These rates may vary from city to city because of local demand, taxes and current market conditions. Therefore, it is better to start by checking the “gold rate today” before proceeding with a gold loan application, as these rates can significantly impact the loan amount you borrow on the value of your gold.

Understand the LTV

LTV or Loan to Value is the ratio or percentage of the amount borrowers can avail against their pledged gold. This ratio is proportional to the purity, weight and market value of the gold. However, RBI regulates the LTV ratio, market volatility, global trends, and economic conditions, as well as terms proposed by the lender impact the LTV applicable. 

Only a few assets provide instant liquidity, such as gold. However, to get the best gold loan deals, it is always advisable to stay informed. It is also recommended to use free financial tools such as gold loan calculator to estimate calculations and plan your financial journey carefully.