Gold loan is unsecured and the easiest option available today. You can get instant financial aid with the help of a loan and without a lot of documentation. Before applying for a gold loan, you need to be aware of the things to avoid. There are a few mistakes that applicants make while applying for a loan, so make sure to avoid them. Here are some common mistakes to avoid while applying for a gold loan so that you get the cheapest gold loan interest rate:
1. Not evaluating the credibility of the lender
Applicants usually skip checking the lender’s credibility while applying for a gold loan. The gold remains with the lender until you repay the loan amount completely, which is why it is necessary to check everything about the lender before going ahead.
You need to do a thorough background check on the lender and then apply for the loan to ensure that your assets are safe with the lender. You can choose lenders by RBI because they will always be the safer option with the loan process.
2. Not comparing options or doing research
People tend to make a common mistake by skipping the research and not comparing enough options before applying for a loan. There are various attractive and competitive loan proposals that lenders offer.
You can get the ideal option if you compare the options properly and avoid falling for the first option. Try to find out all the options and read the fine print to know if you are selecting the right lender for yourself.
3. Not thinking about the repayment structure
Before you take up the loan offer, you should know about the repayment structure. It is essential to understand the loan terms as it helps in planning the finances for every month to avoid any defaults in payments.
There are various ways to repay the loan, and you can choose the repayment method based on the loan amount that you take. You can use regular EMIs, partial payments, bullet repayments, or interest EMI.
4. Not knowing enough about the gold that you are pledging
There are certain things that the lenders check before taking up the gold for the loan. The gold needs to have a purity of 18-22 karat or above, or else it isn’t accepted for the loan. The lenders do not accept gold coins, bars, utensils, or biscuits as collateral to get the loan. There are limitations when it comes to the gemstones in gold jewelry. So you need to know enough about the gold jewelry you are putting up for the loan before applying.
5. Not knowing about the hidden charges
Some financial institutions have hidden charges on the loan that you might get to know about if you read the ‘Terms and Conditions’ section. There are penal charges for late payments, processing fees, auction-related charges, and much more.
When applying for a gold loan, you must be aware of not committing common mistakes and be benignly careful about the charges. Make sure to do extensive research and find out about the details before applying for the loan.