Planning to avail gold loan? Keep an eye on interest rate, processing fee

Meet emergency funding needs with a gold loan

• Most lenders disburse gold loans very fast, which makes them ideal for emergency funding
• Borrowers who have a poor credit score and hence find it difficult to get a personal loan, or get it only at a high rate, may consider opting for an asset-backed loan like this one
• The loan-to-value (LTV) ratio cannot exceed 75 per cent of the value of gold
• Loan rates start from a little over 9 per cent and go as high as 29 per cent
• Lender usually charge a higher interest rate in case of higher LTV, longer tenure, and bigger loan amount, in order to compensate for their rising risks
• Ideally, you should take this loan from a bank or an NBFC, and not from a player in the informal sector, who could fleece you
• If you own hallmarked gold, its value is likely to be assessed higher, and you may be able to borrow more against it
• Some lenders offer an overdraft facility also against gold, which can prove useful for businessmen who need small-duration loans from time to time