Personal Loan Against Gold
If you are looking to take a loan to meet your financial requirement, then you can consider taking the personal loan against gold. In order to do this, you need to offer your jewellery to the lender(Bank or NBFC). The lender does the evaluation of the purity of the jewellery and the evaluation charges are generally paid by the borrower. After the evaluation is done, the paper work related to the mortgage is processed. Banks require you to produce personal documents like Pan Card, address proof and various other things. The lender will provide a loan that is up to a maximum of 80% of the jewellery value. Once you repaid the loan, you can get back your gold back from the lender.
Taking a personal loan against gold is a Secured Loan and it needs to be taken only if you are sure of repaying the amount. Purchasing a Gold loan is basically borrowings against the gold. You should be careful while buying this lone as if you are not able to repay the loan then you might end up losing the gold. The duration of the gold loans is typically ranges from of 3 to 12 months. They make up the best way for funding short term financial requirements. It does not include end use restrictions and thus, user can take this loan for any purpose.
The loan amount is not more than the 80% of the value of gold. The interest rate charged by banks is in the range of 11.5% and 15%. Banks levied the processing fees while NBFCs do not charge the services fees. However, the rate of interest charged by NBFCs is way higher when compared to banks. The gold loan can be terminated at any time without paying any penalty charges. The banks charged a penalty interest of 2% in case of irregular payment of EMIs. The lender keeps the exposure to the market risk that arises from fluctuations in the market price of gold.
Personal Loan – Selecting the Best Offer
If you like to avail a personal loan, then you should do research about the various offers available in the market and then select the best personal loan offer. For selecting a personal loan that provides you maximum benefits, you may consider the following factors.
Rate of interest: You should compare the rate of interests offered by various banks as it differs from one bank to another. It also depends on the bank’s assessment of loan applicant risk profile. The personal loan interest rates influence your total interest payment.
Other charges: You should consider the total cost including the various charges and fees apart from interest rates. These charges are also important and you can compare these charges applied by various lenders to select the one which is least expensive for you.
Loan amount: the banks also differ in the amount of loan sanctioned to the applicant. Therefore, you can also decide about selecting the offer that meets your expectations and give you the loan amount for meeting your financial needs.
Tenure and EMIs: You should also consider the tenure of the loan repayment and EMI amount for choosing the best offer. In case of shorter tenure, the EMIs are higher and in case of long tenure, the EMIs are smaller. You can consider that offer that allows you to decide about your desired tenure and EMI. You can make a decision based on your monthly budget.
The personal Loan is basically an unsecured loan that does not need any security and it can be availed for large number of reasons such as purchasing consumer goods, marriage, personal use and Holidays expenditure. You can avail a personal loan if you are sure to repay the amount in EMIs regularly. It comes to great help during the times of emergency. The processing time of personal loan is shorter as compared to many other loans due to less documentation.
Personal Loan – Fees & Charges
There are different types of fees and charges applied in the entire process of taking a personal loan from the lender. These charges are additional to the interest charged on the loan. Some of the charges are applied prior to the loan disbursement or during the loan period and when you end the loan. You should be aware of these charges before hand so that it will not come to you as a surprise later on. You should also carefully understand the terms and conditions, when these charges are applied and how you can prevent some of these charges by making the repayment on time.
Processing fee – It is basically the amount charged by the lenders for covering the processing costs of your loan application. The processing fees changes from one lender to other. It is generally calculated as a percentage of the loan amount and it comes between 1% to 2% of personal loans. There are some banks that levy a flat fee of Rs 1000 or Rs 2000 directly, and then subtract the balance processing fee from the loan amount prior to its disbursal. The processing fee is collected directly with your loan application along with supporting documents.
Pre-payment fee – This fee is calculated as a penalty paid by the borrower to the lender in case a borrower pays back the personal loan prior to the end of the loan. The pre-payment fees are calculated as a percentage of the outstanding principal of the loan amount. It differs from 2% to 5% of the outstanding loan amount. The prepayment is permitted only after a certain locking period that is usually 6 months as per the original tenure and sum of the personal loan. In case you make a late payment then there are charges for late fees. As a borrower, you should read the complete documents before taking loans regarding the applicable late fees. It varies from 2% to 3% per cent of the personal loan EMI.
Cheque bounce charges – In case, your cheque gets bounced due to insufficient balance in the account then you need to pay the cheque bounce charges. In case, you have given post-dated cheques for the debit of EMI from your account, then always ensure to keep sufficient funds in the account each month. The charges of a single cheque bounces vary from Rs 250 to Rs 500 as penalties.
Duplicate Statements Charges – The lender usually gives a statement detailing about the repayment schedule when the loan is sanctioned. In case, you lost it, you can request the lender for issuing a duplicate statement which indicates your balance loan amount as well as the remaining EMIs. The banks usually charge between Rs 100 to Rs 500 for the issuing the duplicate statements.
Documentation charges – For the verification of various documents provided by you for the loan application the documentation charges are levied. There are third party vendors employed by various banks that do the document verification. These charges vary from Rs 500 or Rs 1000.
Personal loans – Pre Approved Personal Loans
Pre-approval of loans is basically a marketing strategy applied by banks and financial institutions to improve their credit disbursal by cross selling of its products such as loan products to customers on the basis of the existing information possessed by the customer. Pre-approval personal loan is initiated either by the customer or the financial institution. In case of the financial institution, they cross sells the loan products by using your proven track record with them. Pre-approval loan is an in principle approval offered by the entity for offering a loan of a specific amount in case you fulfil the certain eligibility criteria. There are two types of pre-approved loans consisting of Secured loans like pre approved home loan, car loans, auto loans, etc and Unsecured loans like pre approved personal loan and credit card loans among others.
There are various advantages of using a pre approved personal loans. Using a pre approved loan increase your bargaining power because the reason behind the banks offering you the pre-approved loan is your proven track record and financial credentials like good credit history and cash flow. You can use this leverage offered by the pre-approved loan offer for getting better rates from other banks. A pre-approved personal loan/ credit card loan is ideal for those who want cash urgently. It will prevent you from borrowing the emergency money at exceptionally high rates of interest. A pre-approved home loan increases the bargaining power of the buyer as he has the financial ability for closing the transaction. If you would like to have a pre-approved loan, then you should ensure that you have a good credit history and a sound credit rating. Many financial institutions will look out the information from CIBIL- an agency that offers individual credit rating and decide if a person is eligible for pre-approved loan or not. Also, the requirements of a pre-approved loan are same as taking personal loan from a bank.
Personal Loans – Alternatives to Personal Loans 2
Car Refinance – This type of loan is taken as a line of credit or as a one-time loan that is based on the valuation of your car. It is type of secured loan and the sanction time is 7 working days. The tenure of loan varies from 03 to 60 months. The interest rate of the loan is from 15% to 20%. The processing charges are high and the loan eligibility criteria is based on your monthly income as well as the value of car that is being kept as collateral. It is typically given up to 60% to 80% of the value of the car. It is used as a short term loan available at the cheapest cost.
Personal loan – It refers to the personal loan taken by individual for personal usage and it does not require any security or guarantor for that. It is a type of unsecured loan. The sanction time is usually 5 Working days and the tenure of loan varies from 12 to 84 Months. The interest rate ranges from 12% to 22%. The processing charges for this personal loan are high and the loan eligibility criterion is based on your monthly income. It is used when you need cash for the medium term.
Loan against Property (LAP) – This type of loan is taken by mortgaging the house property. It is a secured loan and the sanction time is 10 to 15 Working days. The tenure of loan ranges from 36 to 120 Months. The interest rate varies from 12% to 18%. The processing charges are lowest and the loan eligibility criteria is based on your monthly income as well as the value of property that is being kept as collateral. The loan is given up to 60% to 80% of the property value. It is taken for a long term period.
Personal loan – Eligibility for Self Employed Professionals
Every loan borrower that avails a personal loan is required to meet the certain conditions related to the loan. It depends on the income earned by the borrower and its repayment abilities. With an assured minimum income, the lending bank gets the assurance that the loan will be repaid. People who apply for a personal loan can be divided broadly into two categories including salaried as well as self employed. The eligibility conditions applicable to both the categories are different and need to be considered separately. One such condition is related to the annual income.
Another factor is the age till which a personal loan can be granted to a person. A bank ensures that a loan is given only till a particular age when a person is able to earn and repay the loan. Because of this reason, age for the salaried are lower as compared to that of self employed. Most of the salaried people get retired at the age of 58 or 60 and thus, they will get personal loan only at this stage. However, a self-employed professional can work for a longer time as there is no fixed age of retirement and thus self employed professionals may get personal loan for a longer period of time and their age limit is higher.
To conclude the article, we can make out certain relevant points that the banks have different criteria for self-employed people and salaried people. The minimum income limit for a self- employed person is relatively lower as compared to the minimum income limit of a salaried person. Also, the age limit for self employed person is higher as compared to the salaried one because they can earn remain active and earn for a longer period of time without any compulsory retirement age.
Personal Loan – Benefits
Personal loans can lead to benefits if it is used in proper way. It depends on how one proceeds on personal loans and how related decisions are taken. Personal loan decisions hold a remarkable place in your scheme of things when you require short term cash. Let’s check out the various benefits offered by personal loan and the decisions associated with them.
Low cost- Personal loans are available at affordable costs to the individual borrowers. The cost of the loan is important while choosing a particular finance method. Nowadays, there are certain borrowers that come with proper groundwork on the rate of interest existed in the loan market.
Varied uses – The usage of the personal loan are many. As the individuals receive the loan amount in the form of check or draft in their name, they can put the loan amount to their desired purpose with no restrictions on its usage. Some of the popular uses of the personal loans include the debt consolidation, car purchase, home improvement, and holidaying. Lender does not bother about the usage of the personal loan.
Source of finance- Another major benefit of the personal loan is that it is a source of finance for certain groups of people. The personal loans come very handy for the individuals who don’t have a high income or who have little savings left after paying off the expenses. The personal loans for some people are designed to offer savings on their own resources so that they can be used in more productive purposes.
Easy availability – Personal loans are also preferred for their trouble-free availability. There has been increase in the number of loan providers that deals in personal loans. The trend in the personal loans has increased substantially in the past few decades. Every borrower can now hope to avail the personal loan for meeting his or her financial requirements.
Personal Loans Against the Fixed Deposits
The fixed deposits of the bank are the most common savings scheme that is open to an average investor. If you are seeking to take a personal loan then one of the easiest ways to get it at lower interest rates is taking loan against a fixed deposit. It offers the bank with collateral or security and an alternative to the bank to liquidate the fixed deposit if the borrower defaults on repayment. The interest rates charged on personal loans against fixed deposits are only a few percentage points more than the interest rates of the fixed deposits. The banks usually give the loan up to 90% of the fixed deposit amount in the bank. Taking a personal loan against fixed deposit is much superior than breaking your fixed deposits.
If you have a fixed deposits lying with you in the bank and you do not have any plans of using it in near future than you can take a personal loan against it from a bank. It is a good option to consider if you require the money badly for a short time. You should not liquidate your fixed deposits and pay penalty charges, but simply take a personal loan against it. The interest rates charged on such loans are 1% or 2% more than the interest you get on your fixed deposit. In case you liquidate the deposit for meeting your short term financial needs, then bank will rework the interest for the exact period for which you have maintained the deposit and do not consider the original higher rate of interest applied when you have kept the fixed deposits.
You should also consider the movement of deposit interest rates for various tenures. Overall, it is advisable to take a loan in case the deposit runs for a longer period. Most of the loans taken against collaterals turn out to be cheap as compared to personal loans. If you can provide something like gold, property or car as collateral against the loan then you will end up paying less for your personal loan. Some of the other collaterals are life insurance policies, RBI Bonds, gold jewellery, National Savings Certificate, shares and debentures.
Personal Loan – Advantages of Taking Gold Loan
The gold loan is a secured loan that is taken against the security as gold. There are several advantages of taking a gold loan. The process of taking a gold loan is quick as it require a minimum documentation and is one of the preferred way of taking loan in times of emergency. As per the banks, it only requires a few hours to avail a gold loan and some NBFCs maintain that taking a gold loan can be done within few minutes. Taking a gold loan is far more attractive as compared to a normal personal loan. The rate of interest charged on gold loans is comparatively much less than that charged on a personal loan. Thus, opting for a gold loan is worthwhile as it put your asset to work and reduces your cost of loan.
There is an emotional bondage that comes with the gold and it ensures the timely payment of the loan amount. There are many families in India who are emotionally attached to gold and it will make you responsible for making repayment of the loan in timely manner. The gold loan is directly linked with cash flow management. In a loan against gold transaction, you need to pay only interest during the tenure of the loan and at the end of the tenure, you need to repay the principal amount. It helps the customers to effectively manage the cash flows.
At a time of emergency, when you need money for a short duration, you can select the gold loans. This way, you can use your asset that you have built over years to survive in times of financial hardship. It is advised that you should take a gold loan only if believe that you can repay the loan back in time. It is very important because in case you do not repay the loan then you may end up losing your most precious asset.