InvestorQ : I will be applying for a gold loan as I need some liquid cash urgently. Is there anything I need to keep in mind before I apply?
Kunal Verma made post

I will be applying for a gold loan as I need some liquid cash urgently. Is there anything I need to keep in mind before I apply?

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Nitin Shah answered.
3 years ago
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Gold loan is one of the best solution for those who need liquid cash urgently. However, there are a few aspects you must bear in mind before you go and apply for a gold loan:

How attached are you to your gold?

We, Indians, love our gold. It has not only been the investment choice for most people of the previous generations, it is something we attach a lot of emotions to because it is usually passed on from one generation to another. But when you apply for a gold loan, you are keeping your gold as collateral. This means you can risk losing your family jewels in the eventuality of you not being able to repay the loan. Not only does this cause immense stress on the borrower but his/her entire family as well.

This is why you should think very carefully before choosing a gold loan and once you have,you should be able to repay the entire loan amount.

If you have a good track record of paying your dues, then you shouldn’t be worried.

How good is your lender?

There are numerous lenders, or non-banking finance companies (NBFCs) as they are also known, in the industry that offer attractive terms for gold loans. But how the company is run is important as they could shut down without any prior notice, thereby feeling away with your valuables.

Do some research and opt for a reputed company and not a fly-by-night lender that could leave you in a lurch. Not just private NBFCs, a number of nationalised and public banks too offer gold loans so do consider taking a loan from them as well.

How good is your gold?

Lenders usually accept gold that is 18K and above; this corresponds to 75% purity and above. Thus, the gold you are pledging should be atleast 18K for the lender to give you a loan.

If you are taking a loan by keeping your gold chain as collateral, then an easy way to find out the purity of the chain is by looking for the karat stamp on the chain. This is helpful and it is mandatory for jewellers to mark Hall Mark and gold karat on each and every gold piece they sell or make.

Your age

Only individuals over the age of 21 can apply for a gold loan.

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