A gold loan is an extremely reliable and secure way of obtaining credit with minimal hassles. It is also quite reliable due to its simplicity and fast processing. Benefits associated with gold loans include easy online applications, flexible terms for repayment, and a quick approval process. The eligibility criteria are simple. Interest rates are lower compared to personal loans. But now, this loan although seems cost-effective, it still provides a way in order to maximise its use. Below are the most effective strategies to help you extract the utmost value from your gold loan.
Tips to Avail High-Value Gold Loan When You are Applying
Following are a few important tips to maximise the value when you apply gold loan
1. Interest Rate Comparison
One of the most important aspects of the gold loan is the rate of interest. Different interest rates are offered by various banks and financial institutions. You must compare these to find the best deal that suits your needs. In this way, the interest rate is directly proportional to the cost of borrowing. There can be a huge amount of savings done in the long run by researching interest rates with many lenders. One should go for a lender that can offer competitive rates along with other loan features.
2. Select Appropriate Repayment Facility
The right repayment option would make your gold loan easy to service and economical. Gold loan providers normally provide various types of repayment options, and each one has its merits. Larger monthly payments are usually provided with long-term loans. However, these loans are likely to result in a high total interest payment. On the other hand, small monthly payments might be achieved with a short-term loan, but at the cost of high interest payments. Your choice should depend on your budget and financial abilities.
Favourable repayment options are:
Standard EMI Option: The borrower pays both principal and interest every month.
Interest-Only Option: The borrower pays only the interest during the tenure, and the principal is paid at the end.
Bullet Repayment: The borrower repays the entire loan amount at once at the end of the tenure.
Partial Payment Option: A combination of principal and interest paid in regular monthly instalments.
3. Negotiate Processing fees
Processing fees and additional charges may increase the cost of your gold loan. Most lenders charge an upfront processing fee for granting the loan. Ask your lender if there is room for negotiating or reducing these charges before finalising the loan. It is equally important to discuss fees like administrative charges or documentation fees as well. These charges often have to be reduced or even waived, especially when you are a loyal customer or have an excellent credit record. These charges reduce your overall loan cost by quite a significant margin.
4. Opt for pre-payments
Prepayments will always save you the amount of total interest that would have accrued on the loan taken. If you have extra funds, consider making prepayments to lower the outstanding principal amount. This will directly reduce the interest on your loan, saving you money in the long term. However, before making any prepayments, confirm that your lender doesn’t impose pre-closure charges. Always read the terms and conditions to ensure there are no hidden fees before making early payments.
5. Stay Informed About Market Value
Gold rates fluctuate with market conditions. Gold loans are secured loans, and hence, the amount you can avail of depends on the present gold price in the market. The best way to increase the loan amount is by keeping abreast of the present prices of gold. When the gold price is high, the lenders will give you a higher loan amount as compared to the proportion of the gold value.
6. Correct Appraisal of Your Gold
The appraisal process of your gold decides the amount you can take as a loan. A proper valuation of your gold is essential to obtain a maximum loan amount. Lenders, as a general rule of thumb, check the purity and weight of your gold. To ensure that you will get the highest loanable amount, ensure that the gold is appraised by a trusted and experienced appraiser. If you need a loan, get multiple opinions on your gold's value before finalising the loan.
Bonus Tip: Timely Repayment is Key
Keep a good credit history as this will serve you in your future life. Return your gold loan in due time to save penalty and late charges. Thus, returning the gold loan in time will improve your credit score, thereby increasing your creditworthiness, which helps you avail better terms and conditions for further loans. In case of difficulties in monthly payments, you can inform your lender in advance so that you are not put through additional financial pressure.
Conclusion
By following these tips, you can maximise the value of your gold loan and reduce unnecessary costs. Always compare interest rates, select the right repayment option, and negotiate fees before finalising your loan to ensure you meet the gold loan eligibility criteria. In addition, maintaining timely repayment will not only help you save money on your gold loan but also enhance your financial standing for future loans.
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