Things you Should Know Before You Go for a Gold Loan
Loans are undoubtedly the best source of short-term borrowings for individuals. They are also a good source of money in case you need quick cash. However, Gold Loan is one such category that has more drawbacks associated with it more than its benefits. Pledging valuable metals for money is a long followed practice in India.
Many households pledge their ornaments or other materials made out of various precious metals. It helps them get a good sum of money in a short period of time. However, Gold Loan is not considered a clever option to get quick money. There are several factors that play an important role while someone takes a loan against Gold.
Before getting into further details, let us understand the meaning of Gold Loan.
What is Gold Loan?
When an individual pledges his/her yellow metal that can include jewelry, scrap items, or even coins as a warrant or collateral against a certain sum of money, it is termed as Gold Loan. Banks or local lenders sanction a certain amount of sum against the pledged metal. Usually, the money offered is based on a fixed percentage of the market value of the Gold pledged.
Once you are ready to repay the amount, the Banks or the local lenders give you your possessions back. These loans fall under short-term loans as they are usually taken for a time period that can range from one month to a year.
Drawbacks of Gold Loan
Interest Rate: The interest rate charged by the banks or local lenders is usually higher. This will keep you under huge pressure until you return the whole amount along with interest. If you are planning to take a loan for a year, then the interest amount you would have to pay might be sufficient enough to buy other jewelry.
Paper Work: When you take your possessions to a Bank, you might have to spend hours to fill the documents to get a loan against Gold. There would be many papers that will require your details including address, etc.
Alternate to Gold Loan
Apart from Interest Rate and Paper Work, there are many other factors that make Gold Loan at least preferred option. Then what is the alternative to taking a Loan? Well, the answer is jewelry Buyers. There are many local merchants that are ready to purchase your ornaments and scrap metal.
Selling your precious metals to these local buyers is the best option at present. If you look at the surge in prices of gold, buying gold has become a dream for many. That is why these buyers can pay you a good sum of money against your valuable possessions
The most amazing reason for selling your precious metals to these buyers is that they do not ask for any paperwork. You do not need to spend hours on the documentation. All you have to do is take your ornaments or related items to these buyers and after verifying the purity of your ornaments, these buyers would pay you a good sum of money against these metals.
This is the reason why we can see many local buyers in different cities in India. These days, you definitely find a Gold Buyer in Gurgaon and Delhi. However, before visiting these buyers, you need to verify each and every detail. There are many fraud buyers that you will in the market. These buyers usually believe in doing fraudulent activities.
Always make sure that you are visiting a trusted Gold Buyer who has years of clean track record. In case you happen to meet a cheat Buyer, you will end up losing your pledged metal at a very low price. But, if you are vigilant from the very beginning, selling gold to these buyers is never a bad option.
