Gold loan insurance is developed for prospects possessing insurance coverage to the gold, pieces of jewellery, embellishments or articles, at the time of closure of the gold loan and thereby discharging all the gold ornaments. This insurance is taken as a part of home Insurance and Insurance for other articles too.
Gold Loan is the loan taken against gold (gold ornaments or gold articles) as collateral for security reasons from any Bank, NBFC, Local lender or Financial Institution. The gold article or ornament pledged must be within the value of 18-24 carats of gold, delivering a Gold Loan Per Gram of Rs 2737 to Rs 3345. Each family has some gold articles with them, and this protects them at the time of hardship by providing the family gold loan. The gold loans are secured loans as the lender keeps expensive gold jewellery or articles in the creditor’s ownership. If the loan amount is not paid back within the stipulated time, the lender can liquidate the gold to realise his deficit money. The bank or NBFC charges interest rate as per the loan amount borrowed and examines the value and weight of the gold pledged, and when the debtor refunds the gross loan amount along with the rate of interest charged therein, he gets the pledged gold articles back. Banks charge an interest rate on Gold loans that a person takes by securing gold as the collateral for a certain period, and after the loan is reimbursed, the gold is returned to them, which is when gold loan insurance plays its crucial function.
Recently India's dominating private general insurers have joined with general insurance companies to deliver insurance on gold articles and introduced the new initiative of the gold shield. This initiative is formulated to provide insurance coverage on gold articles pledged by customers to the lenders at the foreclosure of the gold loan. After the tenure matures, release the gold articles kept as collateral by them. This loan insurance arrives as part of Home Insurance; therefore, the maximum percentage of insurance coverage for gold ornaments is restricted to 15% of the total home insurance policy amount insured by insurance companies.
The Gold Shield gold loan insurance scheme has some distinct advantages, and they are: simplest way of receiving Gold articles insurance coverage; coverage extends to acts like burglary, thievery, theft from the insured's house, loss in transit and other natural calamities; and comes with nominal premium payments; minimum documentation work; easily accessible over the counter commodity; broader alternatives available of some coverages; includes repair cover for mechanical deterioration; easy claim method and almost takes some minutes to activate a policy.
When the debtor has adequate savings, he should make partial payments of the gold loan to the creditor, which will assist him when he encounters a financial problem. If the principal amount of the loan is repaid before then, the serviceable interest on it diminishes, which facilitates the debtor to save some funds. Many gold loan delivering bank schemes like Axis Bank Gold Loan, SBI Bank Gold Loan, HDFC Bank Gold Loan, etc., give this option for their customers.
Gold loans are the prominent options at times of complications and misfortune but must be availed after proper inspection of its components and repayment options. For example, suppose a person lags to repay the gold loan monthly instalments. In that case, the lending institution can convey the debtor repeated reminders, accuse a penal interest, auction the gold jewellery to keep as collateral and take legal action against him. Moreover, the credit score of the lender will also be influenced due to the outstanding loan repayment. So before applying for the gold loan, the pros and cons of the gold loan must be duly analysed.
Online gold loan payment to the creditor is straightforward, and the payments can be made partial or complete. Muthoot Finance Gold Loan Online Payment provides customers with speedy payments instead of gold loans borrowed. Most of the gold loan financing institutes require the debtor to repay the principal amount and interest accrued therein by visiting the branch office or paying it online. No matter where the debtor pays the loan amount, the final collection of pledged gold must be from the initial Bank branch or NBFC where it was pledged.
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