Any decision that we take is based on specific facts and elements that contribute toward either of the course of action we assume to plan to pursue. These factors involve in the decision making process influence or conclusion to a greater extent. One small decision can have a magnified impact on the individual or entity. The effect can cripple the financial balance and stability of a person.
We consider the elements that we believe while deciding: The risk factor or the uncertainty involved, consequences, personal constraints, complexity, and alternatives open for the individual or entity.
These elements are to be considered before finalizing an action. Assessing and evaluating the factor will help the person make a balanced decision in favour of the person. The characteristics can vary based on the circumstances and the requirements of an individual or entity. The fundamental considerations may remain the same, but changes can be there. While availing of credit facility as well, the individuals or the entities can apply the same factors in the context of the facility and its features.
The gold loan is a loan facility that can be accessed very conveniently. It comes under the secured form of loan, which means that something must be considered security to take the loan. In the case of a gold loan, gold is itself used as a security against the loan. The borrowers do prefer this over other credit forms, but they should consider certain factors rather than relying on any option blindly while forming their opinion about the facility. The factors to be considered while applying for a gold loan are as follows:
The quality and quantity of the gold object to be pledged. With variations in the purity of the collateral, the amount of credit will be modified. The borrower should go through the lending institution's standards and regulations (banks and non-banking financial companies) regarding the collateral.
The eligibility criteria are something with which the borrower must be well acquainted. Without being a qualified candidate, the borrower will not be able to get the funds. The requirement over here is that the individual must be a minimum of 21 years of age and a stable income source. These criteria have to be satisfied.
The jewel loan interest rate should be recognized. It is lower comparatively but must be considered before a person is applying for this credit facility.
The documents required to be presented and attached to the application form are basic yet essential. The lending institution (banks and non-banking financial companies) demand the borrowing individual's KYC documents or entity.
The associated costs must be scanned through. The amounts are nominal but can impact the total cost substantially as they are calculated on the total loan amount, including the principal credit amount sanctioned and the interest charge.
The per gram rate of the gold in the market currently that the lender is providing should be compared to ensure the amount that will be sanctioned.
The loan-to-value ratios are the rate based on which the amount is disbursed. The percentages are usually between 70% to 80% of the current market value of gold. The rate can differ for the financial institutions granting the loan. It also depends on the quantity and quality of the collateral provided.
The repayment options provided by the lending financial institutions (banks and non-banking financial companies) should be assessed to determine if the prospects are available and suitable for the borrowing individual or entity.
The factors are to be understood well, and in case of any issues, the borrower can always go through the details on the web provided by the lending institution. The lenders have kept the critical information open for all the borrowers for policies like the Indian Overseas Bank Gold Loan policy on the online platform.
The points discussed above must be gone through thoroughly before finalizing any particular gold loan facility provided by various lenders in the market.
Also Read This-Clarifying the Advantages and Functions of Car Loan
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