Gold loans are secured mortgage facilities provided by the financial institutions (banks and non-banking financial companies) against god article as collateral. The disbursal of funds to the borrowing individual or entity is prompt and swift as the procedure does not require a lot of time. It is one of the most comfortable and smooth policies where the borrower can enjoy monetary assistance without any hassle. With several benefits, gold loans have gained the attention of many borrowers who are looking for quick financing. The gold loan per gram rate is rising at the moment and providing better opportunities to the borrowers. The current demand is evident enough and predicts an even more increased demand in the time to come with soaring gold prices.
The credit facility that is granted against gold is accessible and straightforward to avail, but it comes along with some risks. The significant risk is of non-payment. There can be a circumstance that makes it improbable for the borrowing individual or entity to make payments on time as per the specified schedule and structure mentioned in the agreement. The lending institutions (banks and non-banking financial companies) do present the borrowers with several repayment methods, but despite all the efforts, some scenarios may devoid the individual or entity to maintain the flow of payment of credit amount. The Bank of India gold loan policy comes with various repayment methods for the borrowers to choose and adapt.
The non-payment of one installment will merely invite a penalty which is nominal and will be charged on the balance credit amount. Omitting more than two subsequent payments will result in the collateral’s auction by the lending institution (banks and non-banking financial companies). The lender will provide a notice to the borrower, which will be the final ultimatum for the borrower to make the payments. The borrower can intimate the inability to the lending institution (banks and non-banking financial companies) to salvage the situation, but it has to be timely. The credit score will be negatively impacted and may deteriorate in such a situation.
Though gold loans are not intricate or maze-like, it is the borrowers’ responsibility to acknowledge the consequences. It is indeed a good option for people who do not want to get involved in a lengthy procedure, but certain things must be kept in mind. The prerequisites may not be many, but the aftermath can be destructive if not managed well. The credit score and other related details might not be asked for this facility. Still, it will adversely affect the score in a situation where the borrower finds it difficult to keep up with the payments. The borrowing individual or entity must do a thorough study of the loan details and be sure of the loan amount and the lender with whom they are applying for the gold loans.