A cost is a price that we have to pay for the product or service we buy for ourselves. This price determines the value of the product or service. The charge attached to a particular thing is calculated based on several factors such as the times and efforts put in making that thing available and ready for use in the market. The companies estimate these charges before offering them to us. The cost can be primary and secondary in mature. This ascertainment is done based on the nature of the cost. The initial costs are part of the product or service and can be directly traced or can be connected to the product or service. In contrast, the secondary cost is general or administration cost spent by the companies.
The charges for administrations and operation are levied by the organisations but is recovered from the customers, i.e. us. These administration costs are involved because even after the product or service is made and contoured, certain things have to be done before offering it in the market. It needs marketing, after-sales service, monitoring its working, any query of the customer that has to be catered or any other related service that makes the product accessible. For this, the primary cost is the major part of the payment that we make to obtain a particular good or service and the secondary costs are a small portion of the total amount but can make a massive difference for the customers who are paying for it.
Similarly, when we are availing of a gold loan, there are some costs that form a major part of the total amount, such as the gold loan interest rate whereas the other supplementary services attract some nominal added cost. These additional costs might not be of great importance but certainly needs the attention of the borrowing individual or entity.
Some of these costs are:
- Processing fee- This charge is levied as part of the total loan amount sanctioned by the lending institution (banks and non-banking financial companies). These charges are for the processing and assessment of the application submitted by the borrowing individual or entity.
- Verification or inspection charges- This fee is imposed because the lending institutions have to evaluate the value and quality of the gold article pledged by the borrowing individual or entity. Any form of the gold article can be pledged with the lender, but it has to as per the standards and norms of the lending institution (banks and non-banking financial companies).
- Late payment fee- This fee is situational, and will only be charged if the borrower makes the payment of the loan amount after the specified date of payment as per the agreement. If the borrowing individual and entity are prompt and are able to keep up with the installment, then they do not have to worry about this charge.
These are some of the charges that the borrower may come across while getting or applying for a gold loan. These charges are general, and some institutions do not even charge an extra fee. Any information related to these costs for the Indian Overseas Bank gold loan can be accessed through an online platform. Even if they do, these charges are nominal and do not have much impact. Being aware of these charges can be helpful in deciding the course of action that the borrower needs to take.