Gold loan is very common within people of India as in the financial crisis; they utilize their gold ornaments for source of cash. In present days, the banks have come forward to offer cash loans against gold. The sentiments of the majority of Indian people are wrapped with gold. In an emergency, this unutilized gold can be kept as a mortgage to meet the financial crisis. The borrowers have to find lenders for receiving cash against deposit of gold. There are different types of lenders in the market. Gold loan procedure may vary with the type of lenders.
How Gold Loan Works?
The amount of gold articles that should be deposited to avail cash loan will be evaluated by the lenders. A certain percentage of the value of gold will be offered as a loan to the borrower. The loan amount will be paid as equal monthly installments. Gold loan process explores that the principal amount of the cash loan plus the interest amount will be added to give the total amount of repayment. This total amount will be divided by the number of equal installments to give the value of each repayment. After a certain value of loan is paid back, interest amount can be levied as per government rules. Banks or other registered financial institutions will return some of the gold ornaments as per repayment value. But, private lenders may not follow the same rules. They may apply different rates of interests.
How Lending Rates Vary?
If consecutively follow us, the loan is not paid, then the bank will seize the gold ornaments. After that the gold ornaments will be auctioned to sell the gold value. In this way, the loan amount is realized. The bank or financial institutions use the gold calculator to assess the amount of loan and to calculate the rate of interests. The rate of interest may depend on many factors .The factors are the amount of loan, the tenure of loan and current value of gold rates. The market fluctuations of gold rates will decide the evaluation of the gold value of the borrower. On that basis, the amount of loan will be sanctioned. Gold loan process will include the evaluation of gold deposited. So, when the market rate of gold will be high ,gold should be submitted for sanctioning of loan. In that case, the amount of loan sanctioned will be comparatively higher. Conclusion
It is obvious to state that gold is an asset to family people and it can be utilized in case of financial crisis. The market rates of gold frequently fluctuate and this idle invested value can emerge in case of financial emergency. Money is continuously devaluating. But, gold value is in the upward trend. For these reasons Indians intend to procure gold to meet odd situations. Survey revealed that Indians hold huge idle gold .The Government therefore has made the scheme to extract idle investment to the circulation of cash in lieu of gold. But, the private lenders may take higher rates of interest for gold loans.
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