Skip to main content

Taking gold loan - Watch out for these……

 

Lower interest rates are attractive, but watch out for extra charges Experts advise it is a loss if you are not able to get your gold back as you get only 70 per cent value as loan

TAKING loan against gold is shown to be the easiest way to raise money either for business or to buy an asset like a house. With Kerala-based gold loans companies Manappuram and Muthoot Finance taking the gold loans business pan-India there are advertisements galore on the benefits of taking a gold loan.

But gold loans are not for everyone and there is more than what meets the eye when raising loans against gold. Here is a checklist on what to look for when taking a gold loan.
Do you really need a gold loan? Gold loans were earlier taken mostly by traders and businessmen to meet the credit shortfall in their business cycle. Today, the salaried class is also being encouraged by the companies to take gold loans since the interest rates are low compared to personal loans or credit card cash advances.

Taking a gold loan to meet a shortfall in the down payment of housing loans is okay but taking a gold loan to trade in the stock markets or to service credit card dues is a certain no-no.


How much money can be raised through gold loans?


It depends on the amount of gold pledged. On paper NBFCs are believed to give 75 per cent of the value of gold against 60-65 per cent by banks but due to the stiff competition many NBFCs are giving even 85-90 per cent of the value of gold as loan. The loan amount could vary anywhere between Rs 25,000 to about Rs 10,00,000 while few NBFCs offer loan amounts more than that.


What are the interest rates on gold loans?

Here again there is a difference between NBFCs and banks. NBFCs charge 20-24 per cent as against 12-14 per cent interest rates charged by public sector banks but NBFCs are believed to be faster in disbursing gold loans with many promising loan processing time as low as five or even three minutes.


What are the other charges? One should not get carried away by the attractive interest rates on gold loans as there are half a dozen other charges for gold loans like the handling and processing fee of about 0.25-0.50 per cent, gold assessing charges of about one per cent and also custodial charges for safekeeping of your gold. Like most other loans gold loans too come with pre-closure charges though a few NBFCs promise exemption of the charges.


How is the repayment process?

Many NBFCs allow the borrower to repay the loan as soon as he gets the money and retrieve his gold. Here the interest would be charged only on the basis of the number of outstanding days of the loan, which could be as less as three days. Banks on the other hand have an organised repayment structure like any other loan.

When it comes to gold loans, what many experts advise is that one can take a loan against gold only when one is sure of repaying the loan and getting the gold back otherwise, there is a possibility of losing the gold despite having taken only 70 or 80 per cent of its value as a loan.

-----------------------------------------------------------------

 

Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in L&T Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

 

Popular posts from this blog

Tata Mutual Fund

Being a part of the Tata group, the fund has the backing of a very trusted brand name with strong retail connect. While the current CEO has done an excellent job in leveraging the Tata brand name to AMC's advantage, it is ironic that this was just not capitalised on at the start. Incorporated in 1995, Tata Mutual Fund remained an 'also-ran' fund house for around eight years. Till March 2003, it had a little over Rs 1,000 crore in assets and 19 AMCs were ahead of it. But soon after that the equation changed. It was the fastest growing fund house in 2004 and 2005. During these two years, it aggressively launched six equity funds, two debt funds and one MIP. The fund house as of now stands at No. 8 in terms of asset size. This fund house has a lot to offer by way of choice. And, it also has a number of well performing schemes. Tata Pure Equity, Tata Equity PE and Tata Infrastructure are all good funds. It also has quite a few good debt funds. The funds of Tata AMC are known to...
Read more

UTI Mutual Fund

Even though only a few of UTI’s funds are great performers, this public sector fund house has many advantages that its rivals do not. It has a huge base of retail equity investors and a vast distribution network. As a business, it looks stronger than ever, especially in the aftermath of credit crunch. UTI is, by a large margin, the most profitable fund company in the country. This is not surprising, since managing equity funds is more profitable than debt. Its conservative approach and stable parentage is likely to make it look more attractive to investors in times to come. UTI’s big problem is the dragging performance that many of its equity funds suffer from. In recent times, the management has made a concerted effort to improve performance. However, these moves have coincided with a disastrous phase in the stock markets and that has made it impossible to judge whether the overhaul will eventually be a success. UTI’s top performers are a few index funds, some hybrid funds and its inf...
Read more

Salary planning Article

1. The salary (basic + DA) should be low. The rest should come by way of such allowances on which the employer pays FBT and you don't pay any tax thereon. 2. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property and without any limit on a commercial or rented house. 3. The repayment of housing loan from specified sources is also deductible irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh of Sec. 80C. 4. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental or 20 per cent of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone the family benefits. Yes, the maximum benefit accrues when the rent is over 20 per cent of the salary. 5. A chauffeur driven motor car provided by the employer has no perk value. True, the company would...
Read more

8 Investing Strategy

The stock market ‘meltdown’ witnessed since the start of 2005 (notwithstanding the recent marginal recovery) has once again brought to the forefront an inherent weakness existent in our markets. This is the fact that FIIs, indisputably and almost entirely, dominate the Indian stock market sentiments and consequently the market movements. In this article, we make an attempt to list down a few points that would aid an investor in mitigating the risks and curtailing the losses during times of volatility as large investors (read FIIs) enter and exit stocks. Read on Manage greed/fear: This is an important point, which every investor must keep in mind owing to its great influencing ability in equity investment decisions. This point simply means that in a bull run - control the greed factor, which could entice you, the investor, to compromise with your investment principles. By this we mean that while an investor could get lured into investing in penny and small-cap stocks owing to their eye-...
Read more

Debt Funds - Check The Expiry Date

This time we give you an insight into something that most debt fund investors would be unaware of, the Average Portfolio Maturity. As we all know, debt funds invest in bonds and securities. These instruments mature over a certain period of time, which is called maturity. The maturity is the length of time till the principal amount is returned to the security-holder or bond-holder. A debt fund invests in a number of such instruments and each of these instruments would be having different maturity times. Hence, the fund calculates a weighted average maturity, which would give a fair idea of the fund's maturity period. For example, if a fund owns three bonds of 2-year (Rs 30,000), 3-year (Rs 10,000) and 5-year (Rs 20,000) maturities, its weighted average maturity would be 3.17 years. What is the big deal about average maturity then, you may ask. Well, knowing a fund's average maturity is important because it tells you how sensitive a fund is to the change in interest rates. It is ...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now