A gold loan is the best option to get some immediate funds. Some important factors that one must consider before taking a loan are market conditions, tenure, and interest rates before choosing a lender. Whether you choose a bank or a non-banking financial company, make sure that it has a renowned name in the market and offers the best deals.

Gold loans are the best financing option, as one can use them for urgent needs. Many people opt for this loan also because it does not require a credit score. It does not require you to disclose your credit history and show any current loans or debt obligations. Since it is a secured loan, the interest rate on it is also lower, and it has a wide range of repayment options. Anyone can take gold given that they are 18-60 years old citizen of India, have gold with a purity of 18-24 Karats, and have necessary identification and address proof. To know more, read the following points:

  1. Valuation Of Gold

To figure out the loan amount you will get if you keep your gold jewellery as collateral to get a loan, you need to understand the valuation of gold. The valuation is done on the basis of the purity of the gold. It should be 18-24 Karats if you want to take a loan. Also, make sure it does not have stones. Only a 60 percent loan-to-value ratio is allowed as the loan amount. This means the gold is valued at Rs 1 lakh, and the loan amount acquired for it will be Rs 60,000. Gold loan is based on the weight of gold loan per gram.

  1. Interest Rate

Every bank and NBFC offers different interest rates according to their risk assessment which can range from 7-25% per annum. They use LTV or loan-to-value ratio, loan amount, loan tenure, and other parameters to offer the interest rate on a gold loan. One can use a gold loan EMI calculator on the official website of the prospective lender to check the interest rate that will be levied on the loan.

  1. Tenure

Gold loans have the most diverse tenure options than other loans. One can even pay the loan amount before the tenure ends without paying any fees. Tenures for gold loans vary, as there are short-term loans with repayment terms of seven days to three years and a variety of repayment choices. Make sure when to choose a tenure according to your repayment capacity, as longer tenure means you have to pay higher interest.

  1. Repayment Options

Several repayment options are offered by banks or non-banking financial companies to borrowers. You have the option to choose from regular EMIs, bullet payments, foreclosure, and partial payments. In the case of a bullet loan, the interest repayment is to be made monthly, and the entire loan amount is to be paid via a bullet repayment. One can opt for this option if they are expecting their finances to get better at the end of tenure.

Before taking a gold loan online, make sure you remember these important points and make an informed decision. Compare all the top choices available in the market and find a reliable lender to get a loan.