Are you planning to get a loan against gold jewellery? Then, you have landed in the right place. With the help of this article, we will tell you the most common mistakes people commit while applying for a loan against gold jewellery.
We all know that gold is one of the most popular forms of investing your money.
Whenever you run out of cash, such as during a medical emergency, gold can help fulfil your needs.
So, read further to find about those common mistakes you should avoid.
1) Trading with not-so reputable companies
We all know that a gold loan comes in the category of secured loans and is protected by collateral. Also, till the time you pay back the whole amount of credit, your gold jewellery or the guarantee will be kept by the lender.
In case you prove to be a defaulter, then that collateral will be used by the lender to regain the loan amount he gave you.
Now, you need to make sure that you take a gold loan from a reputable company.
In case the lender proves to be a fraud, then you face a significant loss.
We advise you never to fall into the trap of lucrative interest rates.
2) Not doing good research
So, before applying for a loan against gold jewellery, you are advised to do the right amount of research. It is highly relevant to compare your options carefully. Sometimes, you never know that by investing your time, you may get a perfect deal. Visit different banks, talk with their managers, and make a list of all the favourable options. Besides, financial institutions offering lower interest rates on gold loans or higher LTV (Loan to value) ratio make a perfect deal.
3) Not talking about repayment structure with the lender
When it comes to getting a loan against gold jewellery, it is highly relevant to discuss loan repayment structure with your lender. Otherwise, any confusion may lead to many issues in the future. Also, a thorough understanding of the repayment structure your creditor is offering will help you plan your finances accordingly. It will prevent you from becoming a defaulter.
There are a variety of repayment structures such as regular EMI, partial repayment, etc.
Also, remember that there is a minimum purity criterion for approving your gold loan.