The quest for possessing the yellow metal has been in the pursuit of many from historical times, wars have been waged, and tombs have been constructed to protect the metal that comes into existence only after it is polished into a yellow hue. Most of the gold comes from the African region, China, Indonesia, Canada, Russia With all the rush for gold, there are times when they have been given a different treatment, in the personal financing sector. Gold as a loan has always been a sticky wicket to bat on, with the current debt situation any kind of personal financial crisis has lead to the emergence of offering loans by mortgaging the gold with the banks or lenders who will make it happen.
Gold as a Loan Potential
The potential to view gold as an income source for banks and other lending institutions seems to have caught on, reclaiming back the particular mine until the interest and the loan is repaid back, and they have become considerable options for people who do not have any substantial asset to the mortgage. Once it is averaged out in the monthly expenses budget, they seem to be manageable and fit into the repayment schedule for individuals, however, this form of credit is suited for small business or household requirement for a short-term period.
Factors to consider before a gold Loan
- Gold loans are secured, as the collateral remains with the creditor, and any default in the payment of the loan amount or interest will make the lender to take possession of the gold as against the amounts borrowed. Their many banks that have been providing loans against gold in form of bars, jewelry that is assessed and then kept by the banks or lenders until the amount borrowed is repaid. The interest in availing gold loans are quite high in comparison with the normal borrowing rates owing to the purity of gold to be lesser when soldered
- there are many lenders who provide gild as a mortgage against which loan is provided, however the best deal, and offer rates depends on the different lenders as it is not highly regulated market where the interest rates are capped at, the interest rates are high and different from one lender to the other, finding the best should have a lower interest rate or high loan value is
- the repayment structure of gold loan has to be discussed prior to availing the loan, as it is the lenders choice to go for a structured Equated monthly installments which are ideal for the salaried group who can pay the interest every calendar month, for the business class going for the partial repayment is a better option, as there no structured approach, the repayment is done when the borrower has a sum of money, he can do a bulk repayment at the beginning of the loan borrowable itself
Checking for the purity of the gold that is to be mortgaged is important before going for a gold loan as certain precious stones are to be weighed out before considering the weight for which the gold to be valued.