What Aspects to Factor in When Taking a Union Bank Gold Loan

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Union Bank Gold Loan
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Individuals who are in urgent need of financial support should strongly consider applying for a gold loan due to the fact that they require very little documentation, have a variety of flexible repayment alternatives, and receive their funds very quickly. The fact that a gold loan is secured by the borrower’s gold means that lenders typically do not consider the applicant’s credit score when deciding whether or not to grant the loan. This means that anyone, regardless of their credit score, can obtain a union bank gold loan.

Amount of the loan

Because the loan is offered against collateral that is kept in the form of gold, gold loans can be said to be secured in their very nature. The amount of the loan that the lender is willing to give you is mostly determined by the valuation of the gold that you place as collateral with the lender. This is in addition to the other characteristics that are taken into consideration, such as the LTV ratio and your ability to make repayments. As a result of the Reserve Bank of India imposing a maximum loan-to-value (LTV) ratio of 75% for gold loans made available by banks and NBFCs, borrowers do not receive the full value of their gold as a loan. At this time, financial institutions offer gold loans, the amounts of which often range anywhere from Rs 1,000 to 10 crore.

The rates of interest

The union bank gold loan interest rate is established on the basis of the lender’s evaluation of the risk involved, as well as the consideration of characteristics such as the LTV ratio, loan tenure, loan amount, and others. For instance, because a higher LTV ratio exposes the lender to a greater risk, lenders typically demand a higher interest rate in order to compensate for the increased risk that is associated with loans of this type. In light of the fact that interest rates on gold loans often begin between 8.5% and 9% per annum and can reach as high as 29% per annum, it would be smart to evaluate the interest rates offered by several lenders before deciding on any particular one. You might want to look into visiting online financial marketplaces in order to compare different lenders and select the one that best meets your needs in terms of both loan eligibility and financial standards.

Processing charges

Processing fees for gold loans might take the form of either a fixed rate or a percentage of the loan’s total value. In most cases, it is up to one or two percent of the total loan amount. However, certain creditors may levy a flat cost of as little as ten rupees. Before you send in an application for a union bank gold loan, you should make sure that you have taken into account the processing fee that will be charged by the lender. This fee, particularly in the case of large-ticket loans, can make a substantial difference in the overall cost of the loan, besides the applicable union bank gold loan interest rate.

Loan tenure

Gold loans are considered to be short-term loans, with repayment terms that typically range from one week to three years. When determining the term of your loan, it is important to take into account your ability to make payments and to choose a term that has an interest payment that is within your means to pay back each month. It is advisable to use an online EMI calculator in order to obtain an accurate estimation of the EMI that you can anticipate paying based on the loan amount, union bank gold loan interest rate, and the term that you select. When the tenure is increased, the amount of the EMI will decrease, and vice versa.

Alternative methods of repayment

Some lenders provide additional repayment choices for union bank gold loan borrowers in addition to the standard EMI option, in which the borrower is responsible for repaying both the interest and principal component of the loan. Borrowers have the option of selecting a customised repayment plan that allows them to pay only the interest component of the loan each month while delaying the repayment of the principal component until the loan’s maturity date. Some creditors will also let you repay the interest portion of the loan when you get the loan sanctioned, while others will let you refund the principal portion of the loan at the tenure end.

Borrowers also have the option of choosing a repayment method known as “bullet repayment,” which requires them to return both the principal and union bank gold loan interest rate components of the loan at the conclusion of the term. Therefore, the borrower ought to select, among these alternatives, the one that is the most appropriate for his or her cash flows. 

Fees for pre payments

In the event that the borrower wishes to make prepayment on their gold loan, the majority of lenders do not often charge any fees. Prepayments may result in fees from some lenders of up to 2.25 percent of the total amount still owed on loan. Given that the primary goal behind prepayment is to save money on the overall interest cost of the loan make sure you compare the prepayment charges as well before finalising any lender. The primary purpose behind prepayment is to save money on the overall interest cost of the loan. When you prepay your loan, you should ensure that the union bank gold loan interest rate savings you will realise overall will greatly surpass any prepayment fees that may be incurred.

Gold’s purity and value

The quality and type of gold that is pledged also have a significant role in determining the amount of the union bank gold loan that can be obtained. In most cases, any type of gold decoration, jewellery, or coins can be used as collateral; however, the specifics of this requirement vary from lender to lender. Additionally, lenders evaluate and assess the gold that has been pledged by employing either an in-house valuation setup or third party valuators. The amount of the loan that is sanctioned is based on the evaluation of the gold that has been pledged.