5 Things to Know Before Taking a Gold Loan

With increasing inflation, recent economy has taken a downturn and many people are looking towards firms that offer loan against gold and other luxury metals. Anyone may need short-term dollars to cop

5 Things to Know Before Taking a Gold Loan

With increasing inflation, recent economy has taken a downturn and many people are looking towards firms that offer loan against gold and other luxury metals. Anyone may need short-term dollars to cope up with the unexpected financial needs. Queuing for the bank procedures that too for few dollars, doesn't sound compatible. Another way out for easy and fast money lending is through pawn stores. Saving yourself from fraud dealers is really necessary. Therefore, there's need to look for trusted and licensed gold loan firm.

Few things to consider before taking loan:

1. Short Term Loans

The first thing to know about gold loans is that, they are always short-term, mostly for a period of 1- 2 years. Therefore, one has to repay the amount within this time period only. If you think that you wont be able to repay in such a little time, then don't go for such loans.

2. Rate of Interest

Most commonly, the rate of interest offered on gold loans is less compared to personal loans. There's also slight difference in interest rates provided by banks and non-banking financial companies (NBFC). Banks often charge low interest than the NBFCs. Therefore, if you are not in an emergency need, try to take a loan from a public sector bank, as it usually charge the lowest rate.

3. Calculation of Loan Amount

Before choosing a loan firm, consider the way in which they calculate the value of gold. Some banks regard the last 2 weeks gold prices and take an average for determining the rate per gram, while others go with daily rate. Choose a source that gives a higher value for your precious belonging.

4. Repayment Structure

The repayment of gold loans is quite flexible compared to others, such as personal or car. One can opt for paying interest through EMI's for the entire time period and at the end, pay the principal amount and take the gold back. Its advised to deeply understand the repayment terms before availing a loan.

5. Credibility of Lender

Gold Loans in Canada are fast and require very less paperwork. For a lending company, it's a secure business as they have gold with them. However, the area of concern here, is the safety of gold in their hands. Do check the measures a lender will take to keep your gold safe. Always choose a reputed pawn company that has a proven track record to avoid the chances of any fraud.

Loans against gold are on a rise, as they are the fastest and convenient ways of borrowing money. These were the few things to consider before taking a gold loan in Toronto.