In India, the number of applications for loan against gold or manappuram gold loan has increased dramatically in recent years. COVID-19 has further fueled this growth. The primary reason why it is becoming the go-to choice for most Indians is because of the low-interest rate it carries if compared with unsecured loans like personal loans. Generally, manappuram gold loan seems like a simple way to raise money, either in case of financial emergency or when you need to buy something for a wedding, a festival, or travel. The gold loan allows you to monetize your gold holdings without actually selling them in the markets. However, when choosing a gold loan, many consumers make some basic errors. Here are some typical blunders you should steer clear of when taking out a gold loan.
Not checking the lender’s credibility: It is your gold that you are placing to get quick cash, which is a fraction of the gold that you have pledged; hence, you need to be extra cautious before submitting the manappuram gold loan application. Most people are committing the blunder by not checking the legitimacy of the lender. As a result, you bear more risk than the lender. Therefore, before applying for a loan, make sure to research the lender because your gold remains with the lender until your loan is fully repaid. Choosing only a reputable and well-established bank or NBFC for gold loans. Any organization that is under RBI regulation is always a superior choice for you than the one you found in the nook and corner.
Not comparing different interest rates offered by the lender: Not comparing manappuram gold loan with other lenders in terms of manappuram gold loan interest rate available on the market is a big no-no. They might advertise appealing interest rates while hiding the extra costs incurred during the transaction. You can apply for the loan believing the quoted rate to be the final one, but only until you begin making payments will the extra fees become apparent. You can use any of the fintech aggregator websites to compare interest rates and charges but make sure you also compare the hidden costs of the lender before selecting one.
Didn’t consider enough alternatives: There are several banks and NBFCs ready to lend you money for gold right now, and each one has a different offer for potential borrowers. Almost every bank or NBFC has a competitive manappuram gold loan offering. To create a list of options based on the manappuram gold loan interest rate to loan-to-value ratio, try to get to know as many borrowers as you can and compare their offers. After that, you may be able to narrow down a lender offering you a good deal.
Accepting the first offer made to you: You should never accept the first offer made to you as a borrower. The offers you will come across will get better as you look more closely. In fact, the bank will be compelled to go above and negotiate a better deal for you if you present them with this comparative research when you approach them. Find a lender who offers a higher loan-to-value (LTV) ratio or a reduced manappuram gold loan interest rate.
Not understanding the repayment arrangement: Understanding different repayment frameworks and choosing the one that best suits your needs are very crucial. howitstart Determine whether you are making interest-only payments, lump sum payments, or recurring EMIs. Make sure you have the necessary liquidity when the loan repayment comes up. Check the amount you could save each month to be able to see whether you can afford the EMI costs.
Not knowing which type of gold is accepted by the bank: Keep in mind that banks only issue loans on gold that is 22 karats or higher. As a result, if your gold’s purity is less than this benchmark, either the quantity of the given gold will be decreased to less grams or the loan application could be denied completely by the bank. In the case where you are pledging a diamond necklace having a gold pendant, only the weight and purity of the gold will be taken into account when determining the loan value. While gold coins are acceptable, often any gold coin weighing more than 50 grams is accepted.
Forgetting to read the small print: What requirements must be met before your bank can hold the gold and sell it at auction? What requirements must be met before you can repay the loan early without incurring penalties? At least 90% of consumers fail to read the small-print terms and conditions, which contain various provisions pertaining to the gold loan. You might have to pay more money in manappuram gold loan interest rate if you commit this mistake. Some gold loans may come with a rising type of interest rate, meaning that the rate may move to the following slab after a specific amount of time. Before you sign on the dotted line, go through every one of these details in detail.
Not understanding the concept of LTV: Bank calculates LTV (Loan to Value) for lending purposes and this concept must be understood by the borrower completely. Banks and NBFCs base their determination of the worth of your gold on the information provided by their central office, and then they offer you a loan for up to 60% of that value. For instance, you may be eligible for a loan of up to Rs 3 lakh if the market value of your gold is Rs 5 lakh. You must have a solid understanding of the gold’s market value before you submit your manappuram gold loan application. Be specific about the benchmark. the price they are using and how they have arrived at the current value.
Not reading the customer reviews: It might seem unnecessary at the start but during the term of your repayment, you will come across many challenges, and then you will need good customer service to resolve your doubts. The financial institution from which you obtain the gold loan must be completely customer-focused. They must be prepared to help you if you have any difficulties with loan repayment or other relevant matters. Reputable organizations have top-notch post-sale services.
