You can take gold loan when you need money: It is easy to get loan at low interest rate, know the special things related to it

Taking a loan is a common option in times of financial difficulty. At present, there are many options available like personal loan, gold loan. With the increase in gold prices and increasing demand, gold loans are emerging as a strategic financial instrument. Through this, you get liquidity in a short time without selling precious gold.

Keep some things in mind before taking a gold loan
There are several factors that need to be considered before taking a gold loan. These include interest rates, loan-to-value ratio, processing fees and loan repayment terms. Above all, the safety of the gold you pledge is of utmost importance. In such a case, you should choose a reputed lender (i.e. a firm offering gold loans) that has a secure storage or locker facility or an insured vault.

For how long can you take a loan?
Usually you get 3 to 2 years to repay the loan. But it depends on the bank and NBFC. Like HDFC Bank gives loan for 3 months to 2 years. SBI gives it for three years. Muthoot and Manapuram give loan for longer period.

What is the maximum gold loan one can take?
The maximum loan amount you will get is 90 thousand rupees on gold worth one lakh. SBI gives gold loan up to 50 lakh rupees. They also give loan of 1500 rupees. Since these companies give only gold loan, there is no maximum limit here.

Are any documents required for gold loan?
According to the SBI website, you will have to provide PAN card, Aadhaar and 2 passport size photos. Apart from this, you will also have to provide proof of address.

Does this take into account your credit score?
Gold loan is a type of secured loan. That is why your credit score does not matter in this. You get this loan easily and at a lower interest rate than a personal loan.

How to repay the loan?
Banks or NBFCs give you several options to repay the loan amount and interest, you can choose any of them according to your need. You can pay in equal monthly installments (EMI). Apart from this, you can pay the interest during the lump sum principal payment. This is called bullet repayment, and in this the bank charges interest on a monthly basis.

What will happen to your gold if you do not repay the loan?
If you are unable to repay the loan on time, the lender has the right to sell your gold. Apart from this, if the price of gold falls, the lender can also ask you to pledge additional gold. Taking a gold loan is right only when you need money for a short time. It would not be right not to use them for big expenses like buying a house.