Gold Loan Tips: If you are going to take a gold loan, then keep these things in mind, there will be no problem later..

Gold is a metal that has always had a different importance all over the world. From common women to kings, the hobby of wearing its jewelry was there. But, its most important role was in the monetary system.

Even today, the economic strength of a country is judged by the amount of gold reserves it has. Sometimes governments even take loans by mortgaging gold. Common people also often take gold loans.

In such a situation, we are telling you how to take a gold loan, where to take it from, and what things should be kept in mind while taking a gold loan.

For what purposes should the loan be taken?

You can take gold for works like children's education, marriage, or medical expenses in an emergency. It is considered safer than other loans. But, taking a gold loan is right only when money is needed for a short time.

One should think carefully before using a gold loan for big expenses like buying a house or land.

Take a loan from a bank or NBFC.

This thing depends on your convenience. Gold loans are available at a low interest rate in the bank. On the other hand, non-banking finance companies (NBFC) charge more interest but also give a higher loan amount.

The main business of NBFC is to give loans against gold, so the gold loan is also approved quickly there. However, before taking a loan, you should find out the interest rate in different banks and NBFCs.

The good thing about gold loans is that it is cheaper than unsecured loans like personal loans, property loans, and corporate loans.

Also, pay attention to the extra charges.

Like other common loans, the gold loan also has a processing fee, which varies according to banks and NBFCs. Some financial institutions also give concessions in this. GST is also levied on processing fees.

Some banks and financial institutions also charge valuation fees, which start from Rs 250. There are also some other expenses like service charges, SMS charges, and secured custody fees.

Which option to choose in repayment?
The loan-giving institutions give you many options to pay the loan amount and interest. If you are employed and you get money every month, then you can make payments in EMI. You also have the option of paying interest along with the principal payment in lump sum.

Banks usually give gold loans for 3 months to 3 years. It depends on you for how long you need the loan or in how much time you can repay it.

How to get a loan against gold?
The first condition for taking a loan against gold is that the gold you are pledging should be at least 18 carat pure. Banks or NBFCs give loans only against jewelry and gold coins. You cannot pledge gold coins weighing more than 50 grams. Financial institutions do not even pledge gold bars.

What if you default on the loan?

Here also the general rule of loan applies, if you are unable to repay the loan on time, then the financial institution has the right to sell your gold. Also, if the price of gold falls, then you may be asked to pledge additional gold.