Consider the Factors Affecting the Price of Gold
One should take a note of various aspects that indirectly or directly affect the gold loan interest rates, viz.
- Global movements in Gold prices
- Procurement of Gold by Government
- Demand-Supply mismatch in the jewellery market
Tenure of Gold Loan- Gold loans are generally short term to medium term sources of finance. Based on the time frame, ensure that you repay it during the specified term and secure your gold back into your treasury
Understand the Valuation Method of Different Banks- Understand the valuation methods adopted by the lenders. Remember, none of the lenders will provide entire value of your gold as loan. It is necessary to note that the amount of money obtained from gold loan varies in different banks based on the margin amount.
Learn about the Repayment Terms and Conditions-Enquire properly before you finalise the gold loan lender! Again, the repayment policies and structure vary from lender to lender. Some of the banks allow payment at the end of the tenure, while some of them also allow repayment in terms of instalments or EMIs. Note that EMI will include the repayment of interest and principal amount during the loan tenure.
Identify the Gold Loan Interest Rates- Consider the fact that interest rates on gold loans are higher than educational loans and home loans. Hence, you should evaluate the interest rates charged by different banks. Choose a suitable bank or money lender, after considering their repayment policy, tenure and the interest rates.
Gold loans are fast and easy, but, you must make sure that you pay the loan back or the gold would have to be surrendered. A preferable place to take a gold loan would be a gold loan company rather than a bank, as disbursement could be quick.