Gold Loan: Are you making this mistake while taking a gold loan? 4 simple tips will save you from default..

Gold loan proves to be a better option for borrowing money from the bank. The country's gold loan market is growing rapidly. According to the data, by 2027, India's gold loan market is expected to reach 15 lakh crores with an annual growth of 25 percent. However, along with gold loan borrowers, gold loan defaults are also being seen. But this can be avoided by keeping some things in mind.

What is a gold loan default?

Many people borrow money from the bank against gold but are unable to deposit it on time, due to which their gold loan proves to be a default. In such a situation, not only are people's jewelry confiscated but their credit score also gets spoiled.

What is the harm of gold loan default?

If a gold loan default is proven, people's precious jewelry is confiscated and sold. Apart from this, legal action can be taken in case the loan is not completed. Along with this, you may also have to face financial problems. Apart from this, your credit score in the bank is affected, which may make it difficult for you to get a loan in the future.

Ways to Avoid Gold Loan Default

1. Read the loan terms carefully

Read all the documents carefully before taking a gold loan. For example, understand in detail about interest rates, EMI, loan repayment time, and processing charges. Also, get information related to loan to value. Let us tell you that a gold loan of 75% of the current value of gold can be taken.

2. Make a plan to pay EMI

Before taking a gold loan, make a plan to repay the EMI. Get EMI made keeping in mind all the financial expenses and savings and make arrangements to pay the installment in advance, so that there will be no possibility of loan default.

3. Do not ignore the price of gold

After taking a gold loan, it is very important to keep an eye on the prices of gold. Sometimes the price of gold falls suddenly, in such a situation your loan to value becomes higher. In this situation, the company providing gold loans can demand more margin.

4. What to do if you are unable to pay EMI?

If you are unable to pay EMI on time, then talk to the bank immediately without any delay. Make the bank aware of your financial situation and ask for a grace period to repay the loan. Also, a demand can be made to reduce the EMI of the loan.

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